Managing invoices in a business context raises an important question: how long should invoices and other administrative documents be kept? This period varies according to the type of invoice (paper or electronic), the nature of the activity, and tax obligations. In the UK, several rules and legal deadlines govern the preservation of invoices.
In general, the tax authorities (HMRC) require businesses to keep invoices for a minimum of 6 years. This period starts from the end of the accounting period in which the invoice was issued. For example, if an invoice is issued on March 15, 2023, and concerns a purchase for the year 2023, the invoice must be kept until December 31, 2029, i.e. 6 years after the end of the fiscal year.
Special cases: Some invoices must be kept longer, particularly documents related to warranty acts or long-term contracts, which may require archiving for up to 10 years after the end of the contract expiry date.
There are differences between purchase invoices (suppliers) and sales invoices (customers) when it comes to preservation. Both must be kept for a minimum of 6 years. However, the nature of the invoice (paper or electronic) can influence the preservation method.
With increasing digitization, it is now possible to keep invoices in electronic format. The law allows these documents to be kept in digital form, as long as they are accessible, secure, and protected from any alteration. Businesses may choose to digitize their paper invoices, but they must meet the criteria set by HMRC to ensure the integrity of the documents.
It is therefore recommended to digitize paper invoices as soon as they are received, to facilitate their archiving and reduce the risks of loss or deterioration.
Electronic invoices are subject to the same rules as paper invoices. They must be archived and secured in a format that guarantees their integrity. The PDF format is often used for this, as it is easily accessible and difficult to change. The company must also ensure that these invoices are accessible in the event of a request from HMRC.
Dematerialized invoices, such as telephone, electricity, or digital service bills, should also be kept for 6 years. The digital archiving of invoices not only guarantees space savings but also more efficient management of these administrative documents.
Accounting documents, such as purchase and sales invoices, supporting payment documents, and bank statements, are among the tax documents that must be kept for 6 years in the UK. This also includes documents related to commercial contracts, tax documents, and tax returns. These documents can be used as proofs during a tax audit or an audit by HMRC.
With regard to administrative documents related to taxes, energy bills, electricity bills, or phone bills, it is essential to keep these papers for the duration of tax obligations, which is generally 6 years.
Protecting these documents is crucial. Whether in paper or digital form, it is appropriate to secure them to avoid the risk of loss or unauthorized access. Securing documents can involve the use of digital safes, regular backups, and the implementation of adequate security protocols.
Some businesses need to keep documents longer depending on their business. For example, as part of a commercial warranty or contract with a supplier, it may be necessary to keep these documents for the duration of the warranty. In addition, some documents may be subject to a longer retention period, such as employment contracts, which must be kept for 5 years after the end of the contract, or documents related to purchasing transactions that may have specific shelf lives.
Invoices should generally be kept for a period of 6 years from the end of the financial year in question. Electronic invoices should also be kept for 6 years, but their scanning can facilitate their management and archiving. Some invoices, such as those related to guarantees or long-term contracts, must be kept for 10 years.
It is important to respect the retention periods to avoid tax penalties in the event of an audit by HMRC. It is therefore essential to fully understand the legal obligations and to set up a document management system adapted to keep the bills and accounting documents under legal conditions, while guaranteeing their safety and accessibility.
In case of doubt, it is recommended to seek advice from a Chartered Accountant or a tax advisor to ensure that the company complies with current tax procedures and keeps its documents within the legal deadlines provided.
