Business panel: Regulations apply to the period of time for which records should be kept

Andre Trebert, tax director, BDO Guernsey, replies:

LAST WEEK I considered the types of records that need to be kept for tax purposes. Regulations also apply to the length of time for which records should be kept.

For businesses, companies, trusts, foundations or anyone with income from the letting of property, records must be retained for six years after the end of the year in which the tax return was submitted i.e. for the tax year 2018, if the return is submitted in 2019, records must be kept until the end of 2025.

For all other sources of income, records must be kept for two years after the end of the year in which the tax return was submitted.

The director is not prevented from raising enquiries on an income tax return because the taxpayer is no longer required to retain their records. Similarly, if the director is making an enquiry and believes this may continue after the period for which you are required to retain your records he may extend the period for which you have to retain them by notifying you in writing.

Since the obligation is based on the year in which your return is submitted, those who submit their returns promptly are effectively required to keep their records for a shorter period of time than those who file late. A penalty of up to £2,500, together with a fine of up to £10,000, can be imposed for failing to provide the appropriate records, which then hinders the Income Tax Office in performing its functions under the law.

If records are intentionally falsified, concealed or destroyed the fine can increase to £20,000 and a prison sentence of up to two years can even be imposed.

n For more information, contact a member of BDO’s tax team.