Basis of Retention and Disposition
Broadly speaking, the retention of financial records in the UK is governed by the Companies Act 2006, various pieces of financial legislation, HMRC regulation and any sector-specific regulations. Based upon this, by default the minimum retention period is 6 years from the agreed closure of the relevant financial year.
However, there are some records that are maintained for the life of the company in accordance with the Companies Act 2006. There are some records that an organisation may wish to maintain for longer to provide the picture of business practice and finances over time. There are other records that are governed by their nature as contractual records.
Within the rationale below, unless otherwise stated, the statutory obligation to keep accounting records for 6 years is under the Companies Act 2006, Value Added Tax Act 1994, Value Added Tax Regulations 1995, Taxes Management Act 1970 and Finance Act 1998.
Retention Rules Per Record Type
| Record Type | Minimum Retention Period | Rationale |
|---|---|---|
| Accounts Payable | ||
| Purchase Invoicing – Invoices, requisitions, purchase orders, credit / debit notes, Goods Received Notes | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Journal Processing – General ledger and other journals | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Payment Runs – Records of payment batch processes including any reconciliations | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Purchase Authorisation – Authorisation activities involved in delegating authority for carrying out purchasing activities, including purchasing authorisation limits | Superseded + 6 years | Legal Evidence – Limitation Act 1980, c. 58, s. 5 |
| Supplier Administration – New supplier forms, vendor master and banking data, amendments and notifications | Superseded + 6 years Note that confidential information, such as bank account details, should not be retained after it has been superseded and changes are validated |
Legal Evidence – Limitation Act 1980, c. 58, s. 5 |
| Supplier Statements – Statement of accounts rendered/payable and outstanding orders | Financial Year Closed + 2 years | Reference and reconciliation |
| Accounts Receivable | ||
| Credit / Payment Card Processing – User Profiles – Stored credit card users profiles (credit card numbers, card expiration dates, Address Verification Service details) | Once superseded | Deletion according to Payment Card Industry (PCI) standards and requirements |
| Credit Card Processing – Sensitive Data – Sensitive authentication data, including card verification code and PIN numbers | On authorisation | Deletion according to Payment Card Industry (PCI) standards and requirements |
| Credit Control – Insolvency – Collection and Insolvency correspondence and case paperwork, Offers of settlement plans | The longer of: Case closed / Settlement reached + 6 years Or Financial Year Closed + 6 years |
Legal evidence based on Limitation Act 1980, c. 58, s. 5 and as accounting records |
| Credit Control – Reconciliation – Account amendments, write backs (including (authorisations and supporting paperwork), write offs | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Journal Processing – General ledger and other journals | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Managing Customer Accounts – New Customer Accounts, Amendments to Customer Accounts | The longer of: End of Customer Relationship + 6 years Or Financial Year Closed + 6 years |
Contractual evidence based on Limitation Act 1980, c. 58, s. 5 and support accounting and tax records |
| Sales Invoicing – Billing documents, Invoices, Credit Notes, Debit Notes, Receipts and Delivery Notes, Reconciliation | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Banking | ||
| Bank Account Management – Records documenting the opening, closing and routine administration of bank accounts, including agreements, mandates and authorities for each Bank | The longer of: Account Closure + 6 years Or Financial Year Closed + 6 years |
Contractual evidence based on Limitation Act 1980, c. 58, s. 5 and support accounting and tax records |
| Instructions and Payments – Records documenting the creation and processing of incoming and outgoing payments, Direct debits, standing orders, electronic banking and electronic funds transfer records etc. | The longer of: Life of Instruction + 6 years Or Financial Year Closed + 6 years |
Contractual evidence based on Limitation Act 1980, c. 58, s. 5 and support accounting and tax records |
| Reconciliation and Balance Management – Records of cash balance management, deposits, withdrawals, transfers, bank statements and monthly banking reconciliation; includes bank deposit books, slips and butts, certificates of balance, bank deposit and daily banking summary sheets, cheque requests, cancelled cheques, cheque books/butts, registers, schedules, daily list of paid cheques, dishonoured/unpaid/stopped cheques | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Financial Management | ||
| Capital Expenditure – Capital request forms, works orders and supporting documents | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Cost Centre Accounting – Financial Controlling records of cost element accounting, cost centre accounting, activity based costing, product costing, profitability analysis, profit centre accounting | Financial Year Closed + 3 years | Business need and internal audit purposes |
| Expenses Management – Expenses (including claims, authorisation and receipts), Travel and subsistence, Credit Card statements | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Ledgers and Standing Data – General ledger, Investment ledger and Fixed assets register / spreadsheet; Standing Data, Models, Mandates, Agreements, HMRC Certificates, Covenants | Life of company + 6 years The 6 year period after the date of dissolution is that where where a company can be restored to the register, based upon the Companies Act 2006, ss. 1024-1034 |
Company policy for evidence and business need |
| Logistics – Goods In, Goods Out, Inventory / Stock, Requisition | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Management Accounting – Budgets and forecasts | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Petty Cash – Receipts and authorisations | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Treasury and Investment Agreements – Investment agreements, policies and certificates | Indefinite (minimum Superseded + 6 years) | Evidence |
| Treasury and Investment Dealing – Transaction and payment records, daily dealing packs of money market transactions and cash positions | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Treasury and Investment Reports – Audit and other reports | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Payroll and Leave | ||
| Including: Leave forms Starter Forms to advise Payroll of new member of staff, Wages Sheets, Hours worked, pay rates, holidays, sickness, Deductions Working Sheets, reconciliations, Forms P6, P9D, P11D,P32, P45, P46/P38(S), P60 Student loan repayments Statutory Maternity and Sick Pay records National Minimum Wage records |
Financial Year Closed + 6 years | Based on keeping a holistic financial record and the requirements of the Finance Act 1998 Schedule 18 Part III and Income Tax (Pay as You Earn) Regulations 2003 reg. 97 Exceeds 3 year requirements of Statutory Sick Pay (General) Regulations 1982 reg. 13 + Statutory Maternity Pay (General) Regulations 1986 reg. 26 + Ordinary Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations 2002, reg. 9 + Additional Statutory Paternity Pay (Birth, Adoption and Adoption from Overseas) (Administration) Regulations 2010 (SI 2010/154), reg.9 There is nothing stated on retention within The Shared Parental Leave Regulations 2014 Note that The Statutory Sick Pay (Maintenance of Records) (Revocation) Regulations 2014, in force from 6th April 2014, revokes regulation 13 of the 1982 Regulations which provides for records concerning payments of Statutory Sick Pay to be retained by employers. However, Regulation 13A is still in force and an employer may be required to produce records to show SSP has been paid to their employees and Government guidance is to keep them. Exceeds 3 years after the end of the pay reference period following the one that the records cover for National Minimum Wage (NB civil case can be brought before a court for up to six years after an alleged failure to pay the NMW) – National Minimum Wage Act 2015 Note that under The Deduction from Wages (Limitation) Regulations 2014 there is a 2 year time limit for backdated claims. |
| Report and Accounts | ||
| Published Copy | Life of company + 6 years The 6 year period after the date of dissolution is that where where a company can be restored to the register, based upon the Companies Act 2006, ss. 1024-1034 |
Evidence The Report and Accounts are kept for life of company in line with keeping the minutes of the board meeting at which the accounts were approved |
| Working Papers (on extracted data from ledger to published figures) | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Year End Audit | Financial Year Closed + 6 years | Based on statutory obligation to keep accounting records |
| Taxation | ||
| Corporation – Computations and returns, including payment evidence Also includes HMRC enquiries and responses |
Financial Year Closed + 10 years Note that tax returns could be retained for the Life of the Company to maintain / recreate an accurate financial picture over time |
In case of HMRC investigation; exceeds 6 year requirement within both the Companies Act 2006, Taxes Management Act 1970 and Finance Act 1998 |
| PAYE – Computations and returns, including payment evidence Also includes HMRC enquiries and responses |
Financial Year Closed + 10 years Note that tax returns could be retained for the Life of the Company to maintain / recreate an accurate financial picture over time |
In case of HMRC investigation; exceeds 6 year requirement within the Companies Act 2006, Taxes Management Act 1970, Income Tax (Pay as You Earn) Regulations 2003 reg. 97 and Finance Act 1998. |
| Value Added Tax- Computations and returns, including payment evidence Also includes HMRC enquiries and responses |
Financial Year Closed + 10 years Note that tax returns could be retained for the Life of the Company to maintain / recreate an accurate financial picture over time If applicable, records relating to VAT Mini One Stop Shop (VAT MOSS) must be kept for Financial Year Closed + 10 years |
In case of HMRC investigation; exceeds 6 year requirement within the Companies Act 2006, Value Added Tax Act 1994, Value Added Tax Regulations 1995, Taxes Management Act 1970 and Finance Act 1998 |
Citations and Resources
Companies Act 2006 s.388, Accounting Records: “Accounting records that a company is required by section 386 [see Note 3] to keep must be preserved by it…in the case of a public company, for six years from the date on which they are made”
Value Added Tax Act 1994 Schedule 11 s. 6, Administration, collection and enforcement – Duty to keep records: “The Commissioners may require any records kept in pursuance of this paragraph to be preserved for such period not exceeding 6 years as they may require”
Finance Act 1998 Schedule 18 Part III, Duty to keep and preserve records: “The records must be preserved for six years from the end of the period for which the company may be required to deliver a company tax return…[or later if] any enquiry into the return is completed, or…if there is no enquiry, the Inland Revenue no longer have power to enquire into the return”
Income Tax (Pay as You Earn) Regulations 2003, Chapter 3 PAYE Records, Inspection of employer’s PAYE records, reg 97 “an employer must keep, for not less than 3 years after the end of the tax year to which they relate, all PAYE records which are not required to be sent to the Inland Revenue by other provisions of these Regulations.”
Statutory Sick Pay (General) Regulations 1982 reg. 13, Records to be maintained by employers, “Every employer shall maintain for 3 years after the end of each tax year a record, in relation to each employee of his, of [etc.]”
Statutory Maternity Pay (General) Regulations 1986 reg. 26, Records to be maintained by employers, “Every employer shall maintain for 3 years after the end of the tax year in which the maternity pay period ends a record in relation to any woman who is or was an employee of his of [etc.]”
Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations 2002, reg. 9, Records to be maintained by employers, “Every employer shall maintain for three years after the end of a tax year in which he made payments of statutory paternity pay or statutory adoption pay to any employee of his a record of [etc.]”
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