What records do I need to keep for HMRC?

You need to keep enough records to prove your business income, expenses, tax calculations and filings are correct. For a limited company, this includes company records and accounting records. For a sole trader, this includes sales, income, business expenses and personal income records. Bank statements alone are usually not enough.

GOV.UK’s limited company records guidance explains what company and accounting records limited companies must keep.

GOV.UK’s self-employed record-keeping guidance explains what records sole traders need to keep.

Merranti’s HMRC records guide is a useful starting point because many business owners know they need to keep “some records”, but are less clear on what HMRC may actually expect if questions are asked.

Why record-keeping matters

Good records are not just admin.

They support the figures on your tax return, VAT return, payroll records, annual accounts and Corporation Tax return.

If HMRC opens a compliance check, you may need to show how the figures were calculated. That can include invoices, receipts, contracts, bank statements, payroll reports, stock records, mileage logs and explanations for unusual transactions.

GOV.UK explains that HMRC may check records to make sure the right amount of tax is being paid in its limited company records guidance.

Poor records can create problems even where the business has not deliberately done anything wrong.

If an expense is genuine but cannot be evidenced, HMRC may challenge it. If income is not clearly recorded, HMRC may question whether sales have been missed. If personal and business spending are mixed, HMRC may ask whether expenses have been overstated or income understated.

Merranti’s guide on mixing personal and business money is useful because many record problems start with unclear bank transactions.

Records a limited company must keep

A limited company must keep both company records and accounting records.

GOV.UK’s limited company records guidance says company records include details of directors, shareholders, company secretaries, shareholder votes, resolutions, loans or mortgages secured against company assets, and transactions involving shares.

A company must also keep a register of people with significant control.

These are not the same as receipts and invoices. They are legal company records.

The company must also keep accounting records.

These include records of:

• money received and spent by the company
• assets owned by the company
• debts the company owes or is owed
• stock held at the end of the financial year
• stocktakings used to calculate stock figures
• goods bought and sold
• who goods were bought from and sold to, unless the company is a retail business
• records needed to prepare annual accounts and the Company Tax Return

That usually means keeping invoices, receipts, bank statements, contracts, sales records, purchase records, delivery notes, payroll records and supporting calculations.

Merranti’s Corporation Tax guide is useful here because Corporation Tax is based on taxable profit, and taxable profit depends on reliable accounting records.

Records a sole trader must keep

Sole traders also need proper records.

GOV.UK’s self-employed record-keeping guidance says self-employed people need to keep records of all sales and income, all business expenses, VAT records if registered for VAT, PAYE records if they employ people, and records about personal income.

This means a sole trader should keep evidence of both income and costs.

For income, that may include:

• sales invoices
• till rolls
• platform statements
• bank receipts
• customer contracts
• sales summaries
• payment processor reports

For expenses, that may include:

• supplier invoices
• receipts
• bank statements
• card statements
• mileage records
• loan or finance documents
• insurance documents
• software invoices
• rent or office cost records

The point is not just to keep files. The point is to keep records that explain the tax return.

Merranti’s business expense guide is useful because an expense being paid by the business does not automatically mean it is allowable for tax.

Bank statements are not enough

Bank statements are important, but they are not usually enough by themselves.

A bank statement may show that £240 was paid to a supplier.

It does not always show what was bought, whether VAT was included, whether the cost was business or personal, whether the item was capital or revenue, or whether the supplier invoice was valid.

That matters for tax.

For example, a bank statement may show a payment to Amazon. Without the invoice or receipt, it may be unclear whether the purchase was office equipment, personal shopping, software, stationery or something else.

A bank statement may show a restaurant payment. Without context, it may be unclear whether it was staff subsistence, client entertaining, personal spending or a team event.

Merranti’s business expense guide is relevant because the tax treatment depends on the purpose and evidence, not just the payment.

How long do you need to keep records?

The retention period depends on the business type and tax involved.

For limited companies, GOV.UK’s limited company records guidance says records must usually be kept for 6 years from the end of the last company financial year they relate to.

Records may need to be kept longer if they cover more than one accounting period, relate to assets expected to last more than 6 years, the Company Tax Return was late, or HMRC has started a compliance check.

For self-employed people, GOV.UK’s guidance on how long to keep self-employed records says records must usually be kept for at least 5 years after the 31 January submission deadline for the relevant tax year.

For example, if a 2025/26 Self Assessment return is filed by 31 January 2027, records should usually be kept until at least the end of January 2032.

It is often sensible to keep important records longer where they relate to assets, property, loans, capital gains, company structure or ongoing disputes.

Digital records and accounting software

Many businesses now keep records digitally.

That can work well, but only if the records are complete and readable.

A photo of a receipt is usually more useful than a lost paper receipt. Cloud accounting software can also help by linking invoices, receipts and bank transactions.

However, software does not remove the need for judgement.

If the bank feed imports a transaction and the software guesses a category, that does not prove the tax treatment is correct.

Common software problems include:

• sales coded to the wrong category
• personal costs posted as business expenses
• loan repayments treated as income
• asset purchases treated as ordinary expenses
• director withdrawals posted incorrectly
• VAT treatment guessed from old rules
• missing receipts attached to bank payments
• duplicate transactions from bank feeds

Merranti’s HMRC records guide explains why keeping records up to date throughout the year is usually better than rebuilding them after the deadline.

Records for limited company directors

Limited company directors need to be especially careful because the company is separate from the director personally.

GOV.UK’s limited company records guidance says there must be a clear division between the company’s finances and those of the owners and directors.

That means company money should not be treated as personal money.

Directors should keep records for:

• salary payments
• dividends
• dividend vouchers
• director’s loan account movements
• expense reimbursements
• personal costs paid by the company
• company assets used privately
• benefits in kind
• pension contributions
• mileage claims
• business travel
• shareholder decisions

Merranti’s director’s loan guide is useful because unclear withdrawals can become overdrawn director’s loan accounts.

Merranti’s salary and dividends guide is also relevant because dividends need proper company records, not just bank transfers.

Records for expenses

Expense records should show what was bought, when it was bought, who supplied it, how much VAT was charged if relevant, and why the cost was business-related.

This is especially important for costs that HMRC may challenge, such as:

• travel
• subsistence
• home working
• vehicles
• mobile phones
• software
• training
• client entertaining
• staff entertaining
• clothing
• gifts
• personal reimbursements
• Some costs need more than a receipt.

Mileage claims should usually include dates, destinations, business purpose and miles travelled.

Home working claims should be supported by a reasonable calculation or the relevant flat-rate approach.

Vehicle costs should separate business and private use where required.

Client entertaining should be identified because it is often disallowed for Corporation Tax.

Merranti’s home working expenses guide and company vehicles guide are useful where expenses need extra evidence.

Records for landlords

Landlords also need proper records.

Rental income and property expenses may need to be reported through Self Assessment or, in some cases, through a company.

Useful records include:

• tenancy agreements
• letting agent statements
• rental income records
• mortgage interest statements
• repairs and maintenance invoices
• insurance documents
• service charge statements
• ground rent records
• legal fees
• property purchase and sale documents
• capital improvement records

This distinction matters because repairs and improvements are not always treated the same way for tax.

A replacement boiler may have a different tax treatment from an extension or structural improvement.

Records should be kept clearly enough to support both income tax and future Capital Gains Tax calculations.

Merranti’s Self Assessment guide is useful if rental income needs to be reported personally.

What if records are missing?

Missing records should not be ignored.

GOV.UK’s limited company records guidance says that, if company records are lost, stolen or destroyed and cannot be replaced, the company must do its best to recreate them, tell the Corporation Tax office straight away, and include the information in the Company Tax Return.

GOV.UK’s self-employed record retention guidance says that, if records cannot be replaced, the taxpayer must do their best to provide figures and tell HMRC if using estimated or provisional figures.

This means estimated figures should be clearly flagged.

They should not be quietly treated as exact.

If records are missing, the best approach is usually to reconstruct them using bank statements, supplier copies, customer records, accounting software, email invoices and payment processor reports.

The earlier this is done, the better.

Common record-keeping mistakes

The first mistake is relying only on bank statements.

Bank statements show payment movement, not always tax evidence.

The second mistake is mixing personal and business spending.

This makes expense claims weaker and can create director loan or undeclared income questions.

The third mistake is losing receipts.

A genuine cost can still be challenged if there is no supporting evidence.

The fourth mistake is leaving bookkeeping until the deadline.

Reconstructing a year of records at once usually leads to errors.

The fifth mistake is failing to record cash properly.

Cash businesses need daily summaries, till records and explanations for cash movements.

The sixth mistake is not keeping company records.

Limited companies need legal company records as well as accounting records.

The seventh mistake is assuming software guarantees compliance.

Software helps, but the categories and tax treatment still need review.

Speak to Merranti before records become a problem

Record-keeping is not just about satisfying HMRC. It affects tax accuracy, accounting fees, cash-flow decisions, VAT returns, Corporation Tax, Self Assessment and director loan accounts.

A proper review should check whether your records support your income, expenses, VAT, payroll, dividends, loans, assets, stock and tax return figures.

Merranti’s HMRC records guide, business expense guide, guide on mixing personal and business money, director’s loan guide and Corporation Tax guide are useful starting points.

If your records are incomplete, unclear or mixed with personal spending, contact Merranti Accounting before the tax return or accounts deadline so the position can be corrected properly.

What records do I need to keep for HMRC?

You need to keep records that support your income, expenses, tax calculations and filings. For a limited company, this includes company records and accounting records. For a sole trader, it includes sales, income, business expenses and personal income records.

Are bank statements enough for HMRC?

Usually not. Bank statements are useful, but HMRC may also expect invoices, receipts, contracts, mileage logs, stock records, payroll reports and explanations for unusual transactions.

How long does a limited company need to keep records?

A limited company must usually keep records for 6 years from the end of the last company financial year they relate to. GOV.UK’s limited company records guidance explains when records may need to be kept longer.

How long do sole traders need to keep records?

Sole traders usually need to keep records for at least 5 years after the 31 January submission deadline for the relevant tax year. GOV.UK’s self-employed record retention guidance explains the rule.

Do I need to keep paper receipts?

Not always. Digital copies can be acceptable if they are clear, complete and accessible. The important point is that the business can produce evidence if HMRC asks.

What happens if my records are missing?

You should try to recreate the records as accurately as possible and tell HMRC if you use estimated or provisional figures. Missing records can increase the risk of HMRC challenge, penalties or incorrect tax calculations.