Section A: Objective Test

Which TWO of the following statements regarding the retention of records for tax purposes are correct?

Answer options:

An individual not in business must keep records for 5 years from the 31 January following the tax year.

A self-employed trader must keep records for 5 years from the 31 January following the tax year.

A company must keep records for 4 years from the end of the accounting period.

If a tax return is filed late, records must be kept until the later of the normal retention date or the date HMRC's enquiry window closes.

How to approach this question

Recall the statutory time limits for record keeping: 1 year for non-business, 5 years for business (from 31 Jan), and 6 years for companies.

Full Answer

Individuals in business (self-employed) must keep records for 5 years from the 31 January following the end of the tax year. If a return is filed late, the retention period is extended to the later of the normal date or the date the HMRC enquiry window closes. Non-business individuals only need to keep records for 1 year from the 31 January following the tax year. Companies must keep records for 6 years from the end of the accounting period.

Common mistakes

Confusing the 5-year rule for sole traders with the 6-year rule for companies.

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