What records must self-employed keep?

NedS

Hi,

I may be doing some work on a self employed basis next year and am wondering what records I must keep for HMRC.

It would only be a small amount of work, so done on a cash accounting basis, likely paid by cheque or cash, and paid into bank.

Do I need to write an invoice for each piece of work conducted, or are bank statements sufficient record of payments received? Do I need to keep records of my customers, and if so what is the minimum amount of information I should keep (name, address, phone number)?

Are there any issues around GDPR? For this reason I'd like to store and retain as little as possible whilst still being in compliance with HMRC regulations. Is there any specific HMRC guidance as the general guidance is just that - keep invoices, back statements, paying in slips and cheque stubs etc, but doesn't mention anything about keeping records of customers etc or anything else that may be required.

Jeremy535897

See https://www.litrg.org.uk/tax-guides/self-employment
https://ico.org.uk/for-organisations/sme-web-hub/whats-new/news/new-data-protection-self-assessment-checklist-for-sole-traders/

NedS

Thanks. From all the reading I've done, I can't see any mention that I need to keep specific records about my customers, only that I need to keep sufficient records to complete my self assessment tax return. So am I correct in thinking that a simple cash book recording all transactions and matching bank statements showing those cash/cheque deposits is sufficient?

I'm unlikely to claim any expenses as income will be below taxable thresholds - I would likely only have work from home and internet expenses which would all be more than covered by the £1,000 trading allowance anyway.

Jeremy535897

Read https://www.gov.uk/self-employed-records and the links. What records of customers you keep is determined by the evidence you need of sales (and amounts owing unless you use the cash basis) and whether you need them for future business.

SensibleSarah

NedS said:

Thanks. From all the reading I've done, I can't see any mention that I need to keep specific records about my customers, only that I need to keep sufficient records to complete my self assessment tax return. So am I correct in thinking that a simple cash book recording all transactions and matching bank statements showing those cash/cheque deposits is sufficient?

I'm unlikely to claim any expenses as income will be below taxable thresholds - I would likely only have work from home and internet expenses which would all be more than covered by the £1,000 trading allowance anyway.

Sounds like the simple approach will be fine for your circumstances. 
I (sole trader) have a separate business bank account to keep things clearer to me and to make it really easy for setting aside tax/NI stuff but as I'm sure you know, it's not a legal requirement. 
I do keep digital records of invoices (pdfs) which include my client names and addresses, but that's the only client records I keep.
I just use spreadsheets for my books currently as it's super simple - will be moving to MTD software soon although I plan to keep using my spreadsheets for day to day and updating the software once a month. I log and track invoices in one tab, the salary I pay myself in another, along with the sum set aside for tax etc and expenses in another. All expenses have digital reciepts which are saved into a folder if they are ever needed - with a backup in my emails. 

Pennywise

It depends on your business really.  Obviously, businesses like small shops, market stalls, etc don't keep records of their customers as it's a very simple "cash" transaction of just handing over money in return for a product.  If you don't need to keep records of customers and what they bought from you, then a very simple record of date of sale and amount is adequate.

But that puts you at risk of claims for damaged goods, returns, etc., if you don't have records of what you've sold and who to.

Service businesses are different as you're not selling products, but even then, you may need to record basic details in case customers get back to you in the future and request refunds or claim compensation, etc.

Without knowing your business it's hard to advise.  But, in a lot of cases, keeping records of customers and what you sold them is actually for the benefit of the business.

Mistral001

I agree it depends on the business as Pennywise has mentioned.  HMRC will want to know that all your income actually came from the business activities that you have told them you are involved with. So, in many businesses recording what the payment is for, as well as the amount and date, will usually be required.  As for recording names and addresses of customers, that is probably sector-related.  A grocery shop will not ask for them, but an electrical goods shop nearly always will.  In othjer words, retailers who sell high value goods or goods that come with a guarantee.