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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: business records checks: critical definitions: adequate records

Section 12B Taxes Management Act 1970 sets out the record-keeping requirements for businesses that need to submit an income tax return. Paragraph 21 Schedule 18 Finance Act 1998 specifies the same requirements for companies.

These basic provisions specify that a customer must keep all records that may be required to enable them to complete their tax return. In addition businesses must keep a record of all amounts received and expended, and for customers dealing in goods, a record of all sales and purchases of goods made in the course of their trade.

This means the legislation states what records should be kept, but not how they should be kept.

For every business there is a minimum record-keeping requirement which should enable our customers to furnish a correct and complete tax return. Where such minimum records are kept, they will be considered to be adequate for tax purposes.

Records must be evidence-based and proportionate to the size and nature of the business concerned.

Many factors will influence the form of the records and how often they are written up. For examples of adequate records of

You must remember that every case is different and that you are unlikely to find an exact match to these examples. You will need to use your judgement in determining whether a customer’s records are adequate or not. In areas of concern or difficulty you should discuss the case with your manager.