Record Keeping Tips for Limited Company Contractors

Keeping good records as a limited company contractor

Running your own limited company gives you control over how you work, but it also comes with a legal duty to keep proper records. For contractors, this is not just an accounts-department formality. Good record keeping underpins your Company Tax Return, your VAT and payroll filings, and it can be the difference between a straightforward HMRC compliance check and a stressful one.

This article explains what the rules require in general terms. It is not personal advice on your own filings; for that, speak to a contractor accountant.

Why record keeping matters beyond the accounts

Every limited company must keep accounting records that show and explain its transactions, disclose the company's financial position with reasonable accuracy, and include day-to-day entries of money received and spent, along with assets and liabilities. Legislation.gov.uk sets this out under the Companies Act 2006, and it applies regardless of company size.

If your company trades in goods rather than just services, there are extra requirements: stock statements at the end of each financial year, and for non-retail goods, records that identify who you bought from and sold to in enough detail.

For most contracting businesses providing services through a personal service company, the day-to-day discipline is simpler but still important: invoices raised, expenses incurred, bank statements, and the underlying contracts with agencies or end clients.

What HMRC and Companies House actually expect

GOV.UK's guidance on company and accounting records says a company must keep both accounting records and the supporting financial records needed to prepare and file annual accounts and the Company Tax Return. That includes:

• Receipts and invoices
• Contracts (including the contracts underpinning your outside IR35 or inside IR35 engagements)
• Sales books
• Bank statements
• Correspondence relevant to the business

HMRC's general guide to keeping records for tax returns reinforces this from the tax side: records for an accounting period normally must be kept for 6 years from the end of that period.

For contractors, this means the paperwork trail around each contract matters well beyond the length of the engagement itself. If a client later issues a Status Determination Statement, or if a contract review is carried out, having the original contract, correspondence about working practices, and invoices on file gives your accountant or an IR35 specialist something concrete to work from. None of this is the platform verifying anything: an SDS or a contract review is evidence provided by the client or your adviser, not a guarantee of status.

How long to keep records, and where

GOV.UK says company accounting and supporting records must generally be kept for 6 years from the end of the last company financial year they relate to. Longer retention applies in several situations, including:

• Where a transaction spans more than one accounting period
• For long-life assets held by the company
• If the Company Tax Return was filed late
• If HMRC has opened a compliance check

Separately, the Companies Act 2006 material on legislation.gov.uk states that company accounting records must be preserved for 3 years for a private company from the date they are made, which is a distinct statutory minimum sitting alongside HMRC's 6-year tax guidance. In practice, most contractors are best served by keeping records for at least 6 years to satisfy both regimes comfortably.

The Companies Act also requires accounting records to be kept at the registered office or another place the directors choose, and they must be available for inspection by company officers. Records can be kept in hard copy or electronic form. Whichever you choose, the underlying "company records" definition in the Act is broad, covering registers, accounting records, agreements, memoranda and minutes required by company law, so it is worth having a simple filing system (cloud accounting software plus a scanned-document archive works well for most one-person companies) rather than relying on memory or scattered emails.

Practical habits worth building in

• Reconcile your business bank account against your accounting software regularly, not just at year end.
• File contracts and any variation letters alongside invoices for the same engagement, so the commercial and financial paper trail match up.
• Keep correspondence about how a contract actually operated in practice (substitution requests, instructions from the client, scheduling arrangements), since this kind of evidence speaks to substitution and control, the factors tribunals have focused on in cases such as PGMOL, rather than any single label attached to the contract.
• Note down key dates: contract start and end, any Status Determination Statement received, and when the Company Tax Return was filed, particularly if it was filed late, since that extends the retention clock.

Where this fits with your wider obligations

Beyond accounting records, GOV.UK's guidance for limited companies notes that a company may also need to send HMRC a Company Tax Return, payroll information (if you run a payroll) and VAT returns, depending on what the company does. Good records make each of these filings faster and less error-prone, and they are your first line of defence if HMRC ever opens a compliance check.

If you are weighing up contracts and want a sense of current rates, our day-rate benchmarks are a useful reference point, and you can browse outside-IR35 contracts currently listed on the board. For status questions specifically, our other IR35 guides go into more detail on how substitution and control are assessed.

This platform does not determine, verify, or warrant IR35 status; the SDS is the client's legal responsibility. Contractors should take their own advice and consider IR35 insurance.