A quick look through the Insolvency Service’s news and communications feed is enough to see that directors who fail to keep proper company records can face serious consequences.
In one case, The High Court issued an 11-year disqualification to the sole director of a company that purported to be offering payroll services but was eventually found to be acting as an umbrella company and participating in a tax avoidance scheme.
Having failed to cooperate with a liquidators request for statutory records, the Insolvency Service were notified and subsequently it decided to investigate.
Failure to keep proper accounting and other statutory records can lead to a £3,000 fine and/or disqualification from acting as a director, as indicated above.
What company and accounting records do I need to keep?
If you have not reviewed your record keeping in a while, make some time to do so – it’s a worthwhile undertaking that could protect you against unnecessary investigative action, financial penalties or, ultimately, the inability to operate.
Whilst keeping proper records and having these readily available has always been of paramount importance, this responsibility will likely be felt even more acutely as the scope of Making Tax Digital (MTD) widens.
When it comes to your own record keeping, if you consider that there may be room for improvement, now is as good a time as any to take the necessary steps to get your house in order.
As a company director, you must keep:
- records about the company itself; and,
- financial and accounting records.
HM Revenue & Customs (HMRC) may, at any time, check your records to ensure that you are paying the correct amount of tax.
Records pertaining to the company itself, may include (but are not limited to) details about:
- directors, shareholders and company secretaries;
- shareholder votes and resolutions;
- transactions when someone purchases shares in the company; or,
- loans/mortgages secured against the company’s assets.
Limited companies must also keep a register of ‘people with significant control’ (PSC), which must capture details of anyone who:
- has more than 25 per cent shares or voting rights in your company;
- can appoint or remove a majority of directors; and,
- can influence or control your company or trust.
As for accounting records, if required to do so you must be able to evidence at any time:
- All money received and spent by the company, including grants and payments from Coronavirus support schemes.
- Assets owned by the company.
- Debts the company owes or is owed.
- Stock owned by the company at financial year-end, and how this was calculated.
- All goods bought and sold, and details of who you bought and sold them to and from (unless you run a retail business).
How can George Hay help?
Our chartered accountants and business advisers, operating from offices in Hertfordshire, Bedfordshire and Cambridgeshire, can support you to ensure that you are meeting your obligations as a company director.
We can help you to implement robust record-keeping practices, and to maintain detailed company and accounting records throughout the lifetime of your business.
To discuss your needs in more detail with one of our professionals, fill in our contact form or give us a call today.
Link: Running a limited company – Company and accounting records
