More and more businesses are now storing their accounts paperwork electronically and saving valuable office space. Under the terms of the Companies Act, the timescales that the Inland Revenue set for the retention of this material is six years from the end of an accounting period. Electronic Document Management is by far the most efficient method of managing these records and is perfectly acceptable to the Tax man. In fact, the Inland Revenue has a fairly flexible approach to electronic storage and provides the following guidelines in Tax Bulletin 37:
“For unincorporated business we have already indicated in Tax Bulletin Issue 21 (February 1996) that records may be preserved on optical imaging systems, and the originals discarded, provided that what is retained in digital form represents a complete and unaltered image of the underlying paper document. We are now able to go further. Both in the case of companies and unincorporated businesses we can accept other methods which preserve the information in the records in a different form. This is so long as those methods capture all the information needed to demonstrate that a complete and correct tax return has been made and are capable of yielding up that information in legible form. Businesses need to bear in mind this second condition when they change or up-date computerised accounting packages and ensure they have the software to access the old data.
Precisely what information needs to be preserved in this way will vary from business to business. But standard information, such as contractual terms and conditions printed on all invoices, need not be reproduced as part of the record of each transaction. “
For further advice and guidance contact The IPC Group on 08081 45 46 47