Keeping complete and accurate records is essential for even the smallest business. Remember that the Inland Revenue and/or Customs and Excise can issue an assessment and it is then up to you to prove that you do not owe that money. The easiest way to do that is to show them your records.

Most contracting businesses will be over the VAT threshold in any case and so there are certain records which you have to keep. Independence   keeps a record of everything for you, provided that you use its facilities fully. You do, however, need to keep all the supporting paper documents and here is a suggested way of keeping all these pieces of paper so that they can be found easily and so that you can send them to your accountant at the end of the financial year.

The documents should be kept separate for each financial year. Buy a four-ring binder for each year and label it at least on the spine and preferably on the front as well with the Financial Year name, Company name etc. Inside put a set of dividers and keep the following sections:

Sales

Copies of Sales Invoices and optionally the related Remittance Advices;

Purchases

Purchase Invoices (which include letters requesting insurance premiums, company credit card statements etc.); Finance documentation for cars, computers etc.

Bank

Company Bank Account statements and other correspondence.

Payroll

Advice of employee tax codes P9(T);

Working Sheets P11 (substitute);

Employer’s Payment Record P32 (substitute);

Form P45 where appropriate;

Any other correspondence to or from Inspector of Taxes;

VAT

Copies of the VAT Return (Independence  report R020);

Any other correspondence to or from Customs & Excise;

Miscellaneous

Details of any Director’s Loans to or from the company;

List of any exceptional items during the year;

Corporation Tax Assessment (eventually)

Revised: August 15, 2003.