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David Barry Accountants and tax advisers 020 8252 7018/07877671423
Q Is there a legal requirement to keep copies of bank and credit card statements for a certain period of time for tax or other purposes? I'm organising my finances and wanted to know what types of documents I may need to produce and when - I think my bank charges for extra copies on request. Any advice?MO
A If you are self-employed, HM Revenue & Customs require you to keep business records for six years. This means you would need to keep hold of records relating to the current tax year (2009-10) until the end of the 2015-16 tax year.
The type of records that you must keep for tax purposes should include everything you need to complete your tax return 2009 - purchase and sales invoices, payment receipts (from debit and credit cards), statements of interest from banks and building societies, dividend vouchers, evidence of capital gains or supporting claims for capital losses, charges and income related to rental property, expenses receipts and so on.
Even if you don't normally complete a tax return you should hang on to any documents relating to capital gains for around two years after the end of the tax year they relate to, as this will aid calculation of capital gains and losses.
If you don't need to complete a tax return and you're simply wondering how long to keep various paper mountains it's a bit less cut and dried. Mortgage lenders usually want at least a 12-month history of your finances, so holding on to the previous year's banking and savings statements - plus payslips and credit card bills - is recommended. For identification purposes, utility bills, council tax payments and phone records from the past six months might be useful.
You don't need to keep receipts (unless you pay in cash) if you keep bank and credit card statements, as you only require proof of purchase if a problem crops up with something you've bought. However, receipts tend to include a lot more information as several purchases could be covered by a single transaction listed on your bank statement, so it might be worth keeping them for a year for any major purchases.
Do not be laissez-faire with your keeping of records. A letter from Revenue & Customs asking to see the above is liable to put the wind-up any taxpayer and that point you will be grateful that all the above records have been kept.
If you say, "but I do not have the room for all these documents," then this is another story and the subject of another article. Please, therefore, keep open your eyes for a further article.
David Barry Accountants and tax advisers 020 8252 7018/07877671423