Taxation (UK) · Penalties for non-compliance

Record Keeping Requirements and Penalties in TX-UK

Updated 11 October 2026 · Fact-checked

Record keeping rules say how long you must keep the records behind a tax return. Business individuals keep them for 5 years after the 31 January filing deadline. Non-business individuals keep them for 1 year after it. Companies keep them for 6 years from the end of the accounting period. The penalty is up to £3,000 per failure.

Understand Record Keeping Requirements and Penalties

Every tax return is based on records: invoices, bank statements, payroll data and working papers. HMRC can check a return later. If you have thrown the records away, you cannot prove your figures. So the law makes you keep them for a set time.

The period depends on who you are. An individual with business or property income needs records for longer than an employee whose only other income is small. A company works from its accounting period, not the tax year.

The records you keep must be enough to support the return. That means entries of income and expenses, and the supporting documents. You may keep them on paper or electronically, as long as you can produce them to HMRC.

If you fail to keep or preserve adequate records, HMRC can charge a penalty of up to £3,000 for each failure. This applies to income tax and corporation tax records. It is separate from penalties for errors. The error penalties are in the tax rates and allowances ACCA provides: careless 30%, deliberate but not concealed 70%, deliberate and concealed 100%, as maximums. Do not mix the two up.

The record keeping periods and the £3,000 figure are not in the tax tables printed in the exam, so you must learn them.

Key rules to remember

Individual with business or property income: Keep records until 5 years after the 31 January following the end of the tax year; Example: tax year 2025/26 ends 5 April 2026. The 31 January deadline is 31 January 2027. Keep records until 31 January 2032.
Individual with no business or property income: Keep records until 1 year after the 31 January following the end of the tax year; Example: tax year 2025/26 gives 31 January 2027 plus 1 year, so 31 January 2028.
Company: Keep records for 6 years from the end of the accounting period; The period runs from the accounting period end, not from the filing date.
Penalty for failing to keep or preserve records: Maximum £3,000 for each failure; Applies to income tax and corporation tax. Separate from the error penalty percentages.
VAT records: Keep VAT records for 6 years; A registered trader keeps VAT records for 6 years.

How to solve Record Keeping Requirements and Penalties questions

Use this method for any question on how long to keep records or what the penalty is.

1Identify the taxpayer: individual or company. For an individual, decide whether there is business or property income.
2Identify the period of the records: the tax year end for an individual, the accounting period end for a company.
3For an individual, find the 31 January filing deadline that follows the end of the tax year. That date is the starting point.
4Add 5 years for a business or property individual, or 1 year for any other individual. For a company, add 6 years to the accounting period end.
5Write the final date clearly. Then check whether the question asks about a failure to keep records.
6If it does, state the maximum penalty of £3,000 per failure, and keep it separate from penalties for errors or late filing.
7Where the question asks for advice, say what to keep and the form it can take: paper or electronic.

Quickest way: Three-line date check

When to use it: Use this for objective test questions asking for the last date to keep records.

Individual with business or property income: tax year end, then next 31 January, then add 5 years.
Other individual: tax year end, then next 31 January, then add 1 year.
Company: accounting period end plus 6 years. A failure to keep records carries up to £3,000.

Common mistakes in Record Keeping Requirements and Penalties

Counting the 5 years from 5 April, the end of the tax year.
Students assume the tax year end is the start of every time limit.
Fix: Start from the 31 January filing deadline after the tax year end, then add 5 years.
Using 5 years for every individual.
The business rule is the one most students learn best.
Fix: Ask whether there is business or property income. If not, the period is only 1 year after 31 January.
Counting the company's 6 years from the filing date or the payment date.
Students mix up the company rule with the individual rule.
Fix: For a company, count 6 years from the end of the accounting period.
Quoting 30%, 70% or 100% as the penalty for not keeping records.
The error penalty percentages are printed in the exam tables, so they feel familiar.
Fix: The record keeping penalty is a fixed amount of up to £3,000 per failure. The percentages are for errors in returns.
Saying the penalty is automatically £3,000.
Students overlook the word maximum.
Fix: Write that the penalty is up to £3,000.

Worked examples

Example 1

Mira has been self-employed for several years. Her tax year 2025/26 ends on 5 April 2026. By what date must she keep her records for that year, and what is the maximum penalty if she fails to keep adequate records?

Show the solution

Mira has business income, so the 5-year rule applies.
The tax year ends on 5 April 2026. The next 31 January is 31 January 2027.
Add 5 years to 31 January 2027. This gives 31 January 2032.
The penalty for failing to keep adequate records is up to £3,000 per failure.

Answer: Mira must keep her records until 31 January 2032. The maximum penalty is £3,000 for each failure.

Example 2

Delta Ltd prepares accounts for the year ended 31 March 2026. Dev, an employee with only employment income, files a return for 2025/26. State for how long each must keep records.

Show the solution

Delta Ltd is a company. The records are kept for 6 years from the end of the accounting period.
31 March 2026 plus 6 years is 31 March 2032.
Dev is an individual with no business or property income, so the 1-year rule applies.
The 2025/26 tax year ends on 5 April 2026. The next 31 January is 31 January 2027.
Add 1 year to 31 January 2027. This gives 31 January 2028.

Answer: Delta Ltd must keep records until 31 March 2032. Dev must keep records until 31 January 2028.

Exam tips

Learn the three periods as a set: 5 years after 31 January for business individuals, 1 year after 31 January for other individuals, and 6 years from the accounting period end for companies.
In a date question, write the starting date before you add the years. This shows your method and protects the answer.
State the penalty as up to £3,000 for each failure. Do not use the error penalty percentages from the tables for this.
In a Section C advice question, say what the person must keep and that the records can be electronic.

Practice questions from Penalties for non-compliance

Record Keeping Requirements and Penalties in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Record Keeping Requirements and Penalties: frequently asked questions

How long must a self-employed person keep tax records?

Until 5 years after the 31 January filing deadline that follows the end of the tax year. For 2025/26, that is 31 January 2032. The rule applies to both business and property income.

How long must a company keep records for corporation tax?

A company keeps its records for 6 years from the end of the accounting period. A year ended 31 March 2026 therefore needs records until 31 March 2032.

What is the penalty for failing to keep records?

HMRC can charge up to £3,000 for each failure to keep or preserve adequate records. It applies to income tax and corporation tax. It is separate from penalties for errors or late filing.

Do these rules apply to employees?

Yes, but the period is shorter if there is no business or property income. The records must be kept for 1 year after the 31 January filing deadline following the tax year.