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Keeping tax records
If the taxman comes calling, you want to make sure you’ve got all your tax records to hand. Here are some pointers as to what to keep and for how long.
HOW LONG DO I KEEP RECORDS?
Some sources suggest you keep copies of all your returns indefinitely, and supporting tax records for six years (five years and ten months to be precise). However, in practice the taxman can only enquire into your return within two years of the date it was filed. For example if you filed your 2006/7 tax return on January 31 2008, up until January 31 2010 the taxman can quite easily access the file, but after that it would become more difficult.
HOW DO I PROTECT MYSELF FURTHER
If the taxman loses your tax returns, you need to be covered. It’s simple – keep copies of every single tax return you file AND be very careful when filing your returns electronically. You can get paper copies from the taxman’s online service or the advisor that prepared and/or filed your return.
WHAT ABOUT PROPERTY RECORDS?
You need to retain proof of the total amount you have spent on any property you own, including the cost of improvements so you can prove these figures to the taxman if he ever enquires. Keep all your property records for a period of no less than seven years (after the tax year in which the property is sold).
Important!
Don’t panic about unfilled years unnecessarily. There is a difference between failing to file a return that has been issued and not filing for one because it wasn’t required (i.e. you are not in self-assessment territory and therefore do not need to file one).
Note!
If no return has been filed, there is nothing for the taxman to come calling about, unless his enquiry comes from a later taxc year on the basis of fraud and negligence.
WARNING!
If the taxman believes there is income or gains to be assessed, he may issue a determination i.e a demand for tax.
Summary: The taxman can only easily enquire into your return within two years of the date it was filed, BUT if you have a property or don’t file a return, keep your records for no less than seven years – it’s better to be safe than sorry!
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