It is advisable to keep all the records and document regarding Self Assessment tax return sent to the HM Revenue and Customs (HMRC). Though there are no such rules regarding keeping the records, it is better to store them at least for one year that is until the next assessment year.
There are some details and records which you need to fill your tax return correctly. Sometimes it happens the HM Revenue and Customs checks the information and due to any susceptible reasons, they might ask you to show the documents again. Apart from that, a self-employed entrepreneur needs to keep those tax documents for business income and outgoings as well.
It is not a part of legal formality and there are no such rules established by the government. There is not even any prescribed mode of keeping the documents are suggested by any authority. You can store the tax records as per your convenience like digitally, writing on a paper or you can put it on your book-keeping software program for a future use.
You may be charged a penalty if the records presented by you are not in a readable form, or improper, or not accurate or complete.
If due to any reason, you have lost or destroyed the tax records, then put all your efforts to get it back. At least you can try to get back the records like copies of bank statements from your bank and can regenerate duplicate copies of invoice etc.
For regenerating the lost document, you can use the ‘provisional’ and ‘estimated’ figures. The ‘Provisional’ figures signify that you are going to reproduce the figures later, while the ‘Estimated’ figures refer to you won’t be able to present the or confirm the figures any day.
If you are found to be wrong in presenting the figures, then you may subject to pay interest and penalties.
Most people think the tax document is of no use once they are done with the tax return filing activity. But in fact, you need to keep them with utmost care for next three years at least. Federal law may need you to present your tax returns and supporting documents for last three years as per the three years’ law. In case of a fraud, you may need to produce even six years’ document. So it is better to keep a habit to retain the documents for such period of time.
Sometimes, the IRS under suspicion can ask you to produce six years’ tax documents for an audit. So use the techniques and be on a safer side. Keep all the Tax related documents for six years for both business and personal records.
Special Circumstances of Identity Theft
We are aware of the situation of the current world. Now the planet moves with the advancement of computer and technology and we are getting much addictive to the same. Almost for everything, we depend on computer and the internet. Thus we are more exposed to cyber attack. It involves credit card theft, fraud and identity theft, spam, and phishing. Yes, it is a crime and recently the threat of cybercrime has increased rapidly, targeting citizens, businesses, and entrepreneurs.
Cybercrime endangers the individuals and organizations and business owners not only all about their financial damage but also about their personal privacy as well. So it is better to take precautionary steps to save your business from the same. So be careful and keep your eyes open always. There are some tips which should be considered in order to maintain a safe practice.
Always make it a habit to dispose of all your finance, bookkeeping and tax records once you don’t require it anymore. All the financial statements, your tax records or documents containing your personal information should be disposed of through shredding and not by just throwing them away in the bin.
Below is a list of different types of important documents of business and personal nature which should be retained by the organization for different period of time.