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As a member of a business partnership, you're taxed on your share of the business profits. You must keep accurate records as you'll need these to help you fill in your Self Assessment tax return. Your records will also help you answer any questions from HM Revenue & Customs (HMRC). This guide deals with the records you'll need for your 2012-13 tax return and introduces new simpler records you may need for your 2013-14 tax return.
All partners are responsible for making sure that the partnership keeps accurate records. Every partnership must have a nominated partner who must use the business records to fill in the partnership tax return.
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You must keep records so that you can fill in your tax returns fully and accurately. You may have to pay a penalty if you don't keep records or if you don't keep your records for long enough.
The partnership business records must include:
The nominated partner will use these records to work out:
Different businesses need different types of records. Depending on the type of business, the records you may need to keep for your 2012-13 return might include:
Keep your records either on paper or on computer. For electronic records you must:
If you've got more than one business you'll need to keep separate records for each business.
Keep detailed records. It will make it easier to answer any questions that HMRC has about your tax return.
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 taken off. The partnership should keep copies of all payment statements showing that tax is taken off its income. If tax has been taken off 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
You may be able to claim capital allowances for certain assets. 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.
It will help you if you keep separate records of:
Capital allowances - find out more
Tax allowances and reliefs - read detailed guidance
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.
It's easy to make mistakes when you are 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. Your business profits must be worked out using this value.
You may use assets for both business and personal purposes. For example you may live in a flat over your business premises but only receive one shared electricity bill. For your 2012-13 tax return, you must keep enough records so that you can work out which costs relate to business use and which are for private use.
If you use a vehicle for both business and private use, it's usually enough to keep a record of business and private mileage. Split the vehicle running costs in the same proportions.
You may want to use the new simplified expenses rules for future tax returns. See the section 'Simpler Income Tax records for your 2013-14 tax return' below.
Find out more about tax allowances and reliefs for the self-employed
You must normally keep your business records for another five years after the online tax return deadline of 31 January, in case HMRC decides to check your return. The same date applies even if you've sent in a paper tax return.
The tax return deadline for an online 2012-13 return is 31 January 2014.
You send your tax return in before this deadline.
You need to keep your records until 31 January 2019, five years later.
But if HMRC send you, or you send 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 HMRC has started a check - 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 have been lost or destroyed and you can't replace them you must let HMRC know what's happened. You should try to get the missing information in other ways., For example, you can ask banks for interest figures or copies of bank statements. They may charge for this.
Don't delay sending in the tax return while you wait for copies of records. Use the information you've managed to get together to fill in the tax return. If it turns out you can't replace the information you'll need to estimate the missing figures. You must tell HMRC if any figures are:
If you amend the tax return at a later date and you've underpaid tax, you may have to pay interest and penalties.
New rules introduced from 6 April 2013 mean that you may be able to keep simpler records for your 2013-14 tax return.
You can use 'cash basis' accounting, based on the money going in and out of your business, rather than traditional accounting methods that cover stock on hand, amounts owed and so on. You can also claim flat rate expenses for vehicles, use of home for business and use of business premises as a home.
Find out more about the cash basis on Gov.uk (Opens new window)
Read about simplified expenses on Gov.uk (Opens new window)
More about keeping business records on Gov.uk (Opens new window)
