Key takeaway:
Good record keeping is not optional, it is a legal requirement, and it protects you during HMRC checks.
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Whether you’re a sole trader or a limited company, HMRC requires you to keep accurate financial records. Poor record‑keeping can lead to penalties, incorrect tax returns, and unnecessary stress.
What records must you keep?
- Sales invoices
- Purchase receipts
- Bank statements
- Payroll records
- VAT records (if registered)
- Mileage logs
- Loan agreements
- Asset purchase documents
How long must you keep them?
- Sole traders: 5 years after the 31 January submission deadline
- Limited companies: 6 years from the end of the financial year
Digital vs paper records
HMRC accepts digital copies, so scanning receipts or using cloud accounting software is perfectly acceptable.
Why it matters
Accurate records help you:
- Claim the correct expenses
- Avoid penalties
- Prepare accounts faster
- Pass HMRC checks confidently