How long to keep accounting records

UK companies must keep their accounting records for a number of years. How long to keep accounting records is dependent on whether you are a private company or a public limited company (PLC).

In brief, accounting records include your company accounts, company tax return, VAT returns, Payroll records and other financial records.

Section 388 (a) and (b) of the Companies Act 2006 made this clear. A private limited company must keep their accounting records for 3 years. Whereas, a PLC must keep their accounting records for 6 years. The keeping record date starts from your last company accounting year-end date.

In some cases, your company may require to keep financial records for more than 6 years. For examples,

  • To show a transaction that covers two accounting periods.
  • Your company’s equipment or machinery has an economic useful life span longer than 6 years.
  • You deliver your company tax return to HMRC late.
  • HMRC started a compliance check into your company tax return.

Where to keep your accounting records?

Generally, you must keep your company records at your registered office address in the UK. If for any reasons, you would like to store your records somewhere else, you must notify Companies House. The somewhere else, in the UK company law, it is called the Single Alternative Inspection Location (SAIL).

Usually, you would keep your financial records with your company registers at the same place. Your company registers would include the register of directors, copies of your confirmation statement file with Companies House and so on.

For this purpose, both your registered office address and your SAIL address must not be a P O BOX address. They must be a physical location.

If you have any questions about your company accounts, contact Companies House. For any questions relating to your company tax returns, contact HMRC. You may also speak with our London accountants.

New £20 note with JMW Turner’s portrait

The new £20 note with JMW Turner’s Portrait enters into circulation today according to The Bank of England. The £20 note is issued on 20 February 2020. All you see from today’s date and the event is number two and zero. Today is a lucky day.

Who is JMW Turner? JMW Turner is Joseph Mallord William Turner. He was a very famous English Artist and educated at the prestige Royal Academy of Arts. He was born in London in 1775 and went to be with the Lord in 1851.

The bank of England has published an educational poster about the new £20 note with JMW Turner’s portrait. The poster is to help people to differentiate between a genuine £20 note and a fake £20 note.

You can still continue to use the old paper £20 note with Adam Smith’s portrait, the economist. This paper £20 note was first issued in 2007.

The new polymer £20 note with not easy to forge features shall prevent counterfeits.

The UK Government has not yet officially withdraw the old paper £20. Don’t worry, the government would give 6 months notice of the date when you can no longer use the old £20 note.

The new polymer £20 note would not affect Companies House because they do not usually accept cash. You can pay your confirmation statement and other filings fees either by cheque, postal order or using a debit or credit card or electronically.

Global recession

Recently, the media published many articles centered around the global recession is coming. Is this true? If it is, what can you do to keep your business thriving during recession?

Streamline your business operations

It is time to audit your business operations costs, to see if you can get cheaper provider elsewhere with the same quality of service.

Generally, the UK electricity supplier always put their prices up on renewal. Usually, even their cheapest contract price for renewal would be higher than your current contract price. For this reason, It may be worth for you to shop around for cheaper electricity suppliers available in the market nearer to your contract renewal period.

If the office building belong to your business, is it possible for you to install solar panel so you produce your own electricity and if there is any excess, you can sell it back to electricity companies.

Do not be put off by the changing supplier and paperwork stuff to swift supplier. The amount of time you spent on sorting out the paperwork would save you a chunk of money which you can save it or use it on something else.

The same goes with renting your office space. Can you get an office space for lower rent somewhere else? Take into consideration of your staff travelling to work time. Preferably, your location not going to be resulting in your staff have to pay more for travelling. Otherwise, you either increase their salary or you give travelling allowance or you take the risk that they are willing to absorb the extra travelling time and cost. Just be fair.

Encourage your customers to pay

During recession, people usually hoard on to their money and want to spend less. You may like to offer your customers an attractive discount to make them pay you upfront or early settlement. By doing this, you avoid bad debts. So why not?

Similarly, if you must also be mindful before you increase price with your existing customers. Passing on your increasing business costs to your existing customers may not be a good move. You risk them to swift to other provider whom can offer more affordable products and services similar to yours.

If your existing customers come to you with cash flow issues, help them to pay you. Devise an installment payment plan for them. For instance, say, they owe you £5000. You allow them to pay you in equal installment of £1000 per month and they will settle their invoice on the 5th month. With this, zero bad debts for your business.

Companies House and HMRC

In some cases, Companies House and HMRC allow installment payments. However, you must write to them with your proposed payment plan and explained why you cannot pay your late filing penalty and/or your company taxes on due date. Your proposed installment payment plan would not be automatically approved, Companies House and HMRC will review your proposal and get back to you in writing.

For example, you incur late filing penalty of £1500 because your company accounts were late for more than 6 months. Ask your accountant to write to Companies House with a proposed installment plan that what your business can pay. Say you can pay £500 per month,then state that in your proposal. After you settle your late filing penalty invoice, make sure you file your company accounts and confirmation statement on time every time.

Contact our London accountants if you have any questions about your UK company.