Five useful tools for tax year end
For most companies, the tax year end on 5 April 2018 is more than just preparing annual accounts and company tax returns for HMRC and Companies House.
Finance teams up and down the country not only have a busy period ahead, but also the twin questions of document storage and the secure destruction of older records to answer.
Safely disposing of outdated paperwork that’s taking up valuable storage space is just as important as properly storing statutory records.
When it comes to calculating potential ‘destruction’ dates, it’s best to follow HMRC and your own compliance team’s advice. HMRC says that company records of accounting periods usually need to be kept for six years from the end of that period. For accounting periods that ended on 4 April 2012, for example, those records must be kept until 4 April 2018.
For self-employed workers or partnerships, records should be kept for at least five years from 31 January following the tax year that the tax return relates to. For a 2011–12 tax return filed by 31 January 2013, those records should have been kept until 31 January 2018.
Subject to each organisation confirming requirements with its own legal and finance teams, this means that many records from these accounting periods could be destroyed this year. It is also important to know that tax returns that have been subject to a compliance check may have an extended storage time limit.
Here are the five most useful ways to tackle year end accounts, and store and dispose of confidential documents:
1. High spec calculators
When finance and other teams are all-hands on deck getting returns and accounts turned around at busy times of year, make their lives as easy as possible. Look for calculators that are designed for tax calculations, with features such as enhanced reading, efficient input and independent memory.
2. Safe, accessible storage
For safely storing more recent, confidential paperwork that may need to be accessed relatively frequently, lockable filing cabinets are useful assets. These will keep relevant documents within reasonable reach but secure at the same time.
3. Boxed off
Where less access is needed, yet documents still need to be stored, bankers’ boxes and storage boxes are useful. Older financial and legal documents can fall into this category. This could include all those records that need to be kept for six full years after the tax year they come from but are unlikely to be looked at.
4. Encrypted devices
Integral SSD drives and other encrypted data storage devices can be used for the storage of records and are regarded as an accepted alternative to hard copy storage. However, all the relevant information must be kept and where paperwork has been scanned, both sides of all papers must be captured. In the event of an inspection, it’s vital that all data is easily accessible and readable.
5. Cross cut shredders
Safely and legally destroying old confidential data, once the compliance or legal team have confirmed this is acceptable, usually requires the use of cross cut shredders. These shredders, that can shred A4 sheets into hundreds or thousands of pieces, should always be used in an area such as finance.
One option is auto-feed paper shredders that are easier to use because they can handle stacks of paper and take up less of individuals’ time. Another way to ensure compliance with safe destruction is to equip all employees who are handling sensitive records with desk-side confidential shredders.