Managing invoices is a critical aspect of running a business, and one of the key questions is: how long should invoices and other administrative documents be kept? The answer varies depending on the type of invoice, the nature of the business, and tax obligations. In this article, we will outline the rules and legal deadlines governing invoice retention in the UK.
In the UK, HMRC requires businesses to keep invoices for a minimum of 6 years from the end of the accounting period in which the invoice was issued. For example, if an invoice is issued on March 15, 2023, and relates to a purchase for the year 2023, the invoice must be kept until December 31, 2029.
Some invoices require longer retention periods, particularly those related to warranty acts or long-term contracts. These documents may need to be archived for up to 10 years after the end of the contract expiry date.
While both purchase invoices (suppliers) and sales invoices (customers) must be kept for a minimum of 6 years, there are differences in their treatment. The nature of the invoice (paper or electronic) can influence the preservation method.
These serve as proof for the company's accounting, especially in terms of VAT. Their preservation is essential to justify the company's expenses to HMRC.
They are part of the company's accounting documents and must be kept as proof of revenue received, especially when filing a tax return.
With increasing digitization, businesses can now keep invoices in electronic format. The law allows these documents to be kept in digital form, as long as they are accessible, secure, and protected from any alteration. Businesses may choose to digitize their paper invoices, but they must meet the criteria set by HMRC to ensure the integrity of the documents.
Electronic invoices are subject to the same rules as paper invoices. They must be archived and secured in a format that guarantees their integrity. The PDF format is often used for this, as it is easily accessible and difficult to change. Businesses must also ensure that these invoices are accessible in the event of a request from HMRC.
Accounting documents, including purchase and sales invoices, supporting payment documents, and bank statements, are among the tax documents that must be kept for 6 years in the UK. This also includes documents related to commercial contracts, tax documents, and tax returns.
Protecting these documents is crucial. Whether in paper or digital form, it is essential to secure them to avoid the risk of loss or unauthorized access. Securing documents can involve the use of digital safes, regular backups, and the implementation of adequate security protocols.
Some businesses need to keep documents longer depending on their business. For example, documents related to commercial warranties or contracts with suppliers may require longer retention periods.
