When you’re running an accounting practice and juggling multiple clients, you’ll undoubtedly wonder how long you need to keep client records. 

Keeping client records longer than necessary can lead to mountains of paperwork or endless hours of scanning into the digital system, and yet, getting rid of client records sooner than you should can lead to reputational damage and even fines.

Join us as we take a look at: 

  • Onboarding clients: how do I request company and accounting records?
  • How long should an accountant keep client records in the UK?
  • How long do you need to keep ex-clients records?
  • Going paperless with accounting technology: how does it help?

Onboarding clients: how do I request company and accounting records?

Once you’ve found a new client, you then need to start the client onboarding process. Part of the onboarding process should involve requesting paperwork from your new client, such as:

  • Basic company information like structure, incorporation date, etc.
  • Details of people with significant control (PSC) like directors or shareholders
  • Information on any outstanding loans, tax bills or any indemnities and assets
  • Previous financial and accounting record

You’ll want to request this information at the beginning of your new client relationship so you can assess their current financial situation and help advise them going forward.

Working with clients: how long should you keep client records in the UK?

Throughout the course of working with your client, you’ll keep and process accounting records on all company transactions (money received and spent), outstanding grants or COVID support schemes, assets, debts, stocks, inventory, customers (unless your client runs a retail business), and much more. 

This information will be crucial for helping you prepare and file annual accounts, Company Tax Returns and self-assessment for company directors or sole traders.

As a result, you’ll naturally accumulate a fair amount of paperwork, so you will naturally start to wonder:

How long should an accountant keep client records in the UK?

The answer to this question is heavily debated within the industry, with some accountants keeping client records indefinitely while others only store them for the minimum. However, professional bodies like ACCA claim accountants should keep records for at least seven years from the end of the tax year or accounting period.

However, HMRC advises that accountants do not need to be kept for more than six years, also known as the ‘six-year rule.’ This rule applies to all records for accountants and advisors, but the exact amount of time can vary depending on the type of document and client.

You may want to consider factors like:

  • HMRC can seek tax, interest and penalties from clients for situations within the last 20 years
  • Clients’ criminal offences do not have an expiry date, and files relating to criminal cases need to be kept indefinitely
  • Previous financial decisions often impact current events, so having historical information can be very helpful.

There’s not an easy answer to how long you should keep client’s records in the UK, and, instead, you’ll likely need to consider many different factors to find the answer that works best for you and your firm.

Off-boarding clients: how long do you need to keep ex-clients records?

When a client leaves your firm, you’ll need to consider what to do with their records. It’s commonly regarded as best practice to return documents to clients who leave. As part of their disengagement letter, you should explain that any remaining records will be destroyed after a specific period.

How long to keep ex-client records is a matter of broad debate. Some firms keep ex-client records, such as employer’s insurance policies, for up to 40 years, while others retain client records for nearly two decades by converting them into digital copies.

Going paperless with accounting technology: how does it help?

Accounting technology has gone a long way towards solving this debacle by making it possible for accounting firms to safely and efficiently store clients’ paperwork without constantly filing away papers. 

Instead, you need to scan and upload documents into the system to keep them indefinitely, for a set period or destroyed immediately. Or, even better, eliminate the need for scanning and uploading by having the information on one central system like accounting software.

Why accountants should embrace paperless accounting

Making the move to paperless accounting can have many benefits for accounting firms, such as:

  • Keeping everyone on the same page by making it easy for team members to find clients’ paperwork
  • Reducing operational costs by improving processes and minimising the need for physical storage
  • Improving business intelligence with company data and insights at your fingertips
  • Reducing risk as processes and systems have a digital audit trail
  • Establishing better collaboration with clients

Eradicate sole trader admin with Countingup

You can save your practice time manually uploading documents and keeping clients’ records organised with Countingup’s free accounting software. It’s built specifically to help you manage small business clients and make the move towards paperless working. So not only is it a cost-effective platform for them, but it’s simple for your firm to work from too.

The two in one business current account and accounting app automates time-consuming bookkeeping admin for your clients so they can focus on running their business—and send you accurate, structured data to work with. With instant invoicing, automatic expense categorisation and cash flow insights, your clients will be able to keep accurate daily bookkeeping records confidently.

Countingup’s accounting software is MTD-compatible and full of features for you to efficiently review and manage client accounts, with direct access to their real-time organised data. Find out more here.

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