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As a member of a business partnership, you're taxed on your share of the business profits - so you must keep accurate records. You'll need these to help you complete your tax return or to answer any questions from HM Revenue & Customs (HMRC) about a return you've completed.
You should keep your business and personal records separate. It's also a good idea for the partnership to have a separate bank account.
It's the responsibility of all the partners to make sure the partnership keeps accurate records. Every partnership must have a nominated partner who must use the business records to fill in the partnership return.
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You must keep records so that you can fill in the return fully and accurately.
Your basic partnership business records must include:
The nominated partner uses these records to work out:
The more detailed records you keep, the easier it will be to answer any questions that HMRC has about your tax return.
Set up a basic record keeping system - read further information from Business Link
If your partnership works in the construction industry, the partnership may:
Your records should show all the partnership income - including any received after tax has been deducted. The partnership should keep copies of all payment statements showing tax deducted from its income. If tax has been deducted at the higher rate, it's very important that your 'verification reference number' is shown on the payment statement so you can reclaim any overpayment of tax.
Monthly returns and record keeping for CIS - read detailed guidance
It's helpful to keep records of purchases and sales of assets that your partnership uses in the business, such as furniture, equipment and machinery, separate from records relating to day to day running costs and sales. This is because you deal with these differently in your tax return and may be able to claim capital allowances for them. Rather than claiming the whole cost at the time you buy, you reclaim the cost over time. You'll need to keep detailed records to support your claim.
Capital allowances - find out more on the Business Link website
Tax allowances and reliefs - read detailed guidance
Different businesses need different types of records. Depending on the type of business, these might include:
All this information will be useful for completing your Self Assessment tax return and answering any questions that HMRC may have about it.
You'll need to keep business records for up to six years - or longer if HMRC starts a check. See the section 'How long should you keep your records' for more on this.
Set up a basic record keeping system - read further information from Business Link
It's important that you keep your business and personal records separate, so that you can work out exactly what assets, goods and expenses relate to your business.
Mistakes are often made when recording sales if:
Even if you don't record these transactions through a till you still need to keep a record of them. You should note down the goods or services taken or supplied and their normal retail price, and your business profits must be worked out using this value.
If you use assets for both business and personal purposes - for example you live in a flat shop premises - you must keep enough records so that you can work out which expenditure relates to business use and which is for private use.
If you use a vehicle for both business and private purposes, it's usually enough to keep a record of business and private mileage and to split the vehicle running costs in the same proportions.
Find out more about tax allowances and reliefs for the self-employed
You should normally keep your business records for five more years after the normal filing deadline of 31 January. This date applies even if you've sent in a paper tax return.
For example, for a 2010-11 return filed on or before 31 January 2012, you must keep your records until 31 January 2017.
But if HMRC sent you - or you sent back - your tax return very late, you may need to keep your records for longer. You need to keep them until the later of:
You may need to keep your records for longer if a check has already been started - in this case you'll need to keep your records until HMRC writes and tells you they've finished the check.
Find out about time limits for non-business records
Read more about checks into tax returns
If your business records are lost or destroyed and you can't replace them you must let HMRC know what's happened and you'll have to try to recreate them.
Once you've gathered replacement information you use this to complete your tax return. You must tell HMRC whether any figures are:
If you make adjustments at a later date and you've underpaid tax there may be interest and penalties to pay.
Record-keeping (individuals and directors)
Record keeping for the self-employed
A general guide to keeping records for your tax return (PDF 171K)
