Guide to Freelancing - PCG

KEEPING RECORDS
What records should be kept?
The short answer is, keep everything. The law doesn‟t prescribe what records to create, but does
say that if you create any records in your business, these should be retained. You may not always
get evidence, such as a receipt, for small cash expenses, but if this happens, make a brief note of
the amount you spent, when you spent it and what it was for. The record must be made
contemporaneously, in other words near the time of the event rather than retrospectively.
If tax authorities were to inspect your records, they might ask to see any of the following:
• A list of all sales income and other business receipts as they come in, plus supporting records,
for example, invoices, bank statements and paying-in slips to show where the income came
from
• A list of all purchases and other expenses as they arise, with supporting receipts or invoices
(unless the amounts are very small)
• All purchases and sales of assets used in your business
• All amounts taken out of the business bank account, or in cash, for your own or your family‟s
personal use
• Business diaries, mileage logs, minutes of Board Meetings, i.e. supporting records as well as
the primary accounting records
• All amounts paid into the business from personal funds, for example, the proceeds of a life
assurance policy.
Do they have to be kept in paper form?
You don‟t have to keep hard copies of the records if you don‟t want to accumulate a warehouse full
of physical receipts. HMRC says the following about scanning or storing records electronically:
“You can keep most records on a computer or use any storage device
such as CD-ROM, USB memory stick or a network drive. You may not
need to keep the original paper records as long as the method you use
captures all the information (front and back) on the document and
allows the information to be presented to us in a readable format, if
requested.”
Copyright PCG September 2011 Guide to Freelancing Version 7.0 31