Keeping client records: What you need to know

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The question of what to do with old or out of date client records regularly crops up at this time of year. Rachael Power collects a range of answers.

With spring in the air, the question popped up again recently. In response we’ve compiled the best answers and advice from the community in this round-up article. 

In reply to chancewind's question, "How long do you keep records for a client?" Zebaa captured the ambiguity at its heart by answering, "6, 8, 15 & 40... This is a question there is no right answer for as it depends on the subject of the record and your attitude to risk."

Below, we explore the different rules and considerations that come into play, and examine what you can do to reduce the clutter of paper records.

Tax records

Professional bodies, including the ICAEW and ACCA, have their own guidance on keeping client records for their members. 

HMRC's official stance is that the maximum amount of time records need to be kept is six years, commonly referred to as the 'six-year-rule'. 

"The six year rule applies to all records and this applies to accountants and advisers too," a Revenue spokesman said. 

But the length of time that records should be kept can vary depending on...

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About Rachael Power

Your friendly, neighbourhood community editor. 

Twitter: @rachpower10 

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08th Apr 2014 11:05

Record keeping - if in doubt always say seven years

At the beginning of our business I took legal advice on how long to keep records for, the very clever barrister replied " you should keep your records for as long as the longest period that any professional person was successfully sued ". Asked as to who this was ( at that time, and this was 31 years ago ) the reply came " a solicitor". And the period was ? "13 years".

The bigger issue in an electronic age is the ability to view the data given the various migrations through the various versions of software and operating systems, most notably the mighty Microsoft.

The secondary but equally important issue is the access to your data and working papers and the clients' data when it is kept online and not within your own computer, what if your data is in the Cloud somewhere and HMRC need to see it after your practice has ceased. Do you keep the subscription going merely to satisfy the need for continued access ? Do you disclose your access IDs and passwords and let HMRC get on with it or do you download and/or printout everything that is needed ?

 

 

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By J9
08th Apr 2014 11:43

Qualified accountant?

Something I have been asked?

Do you have to have studied for a specific accounting qualification to call yourself an accountant or can it be bookkeeping qualifications and being self taught?

Thanks

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By hpyatt
08th Apr 2014 12:08

unqualified accountant

Just as I can call myself a Teacher, an Acupuncturist or a Magician, anyone can call themselves an accountant after 5 minutes without even knowing what a cash book is.

And believe me, judging from some of the clinets I have taken over, many have.......

 

 

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By SimonP
10th Apr 2014 16:15

Clinets?

[hpyatt]

Just knot a Teecher of Inglish huh?  :-)  

 

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By hpyatt
11th Apr 2014 12:20

Job Descriptions

And certainly not a touch typist either. I should have persevered with Mavis Beacon back in the 90's, I could be 60 wpm by now !!

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By Sykco
08th Apr 2014 12:10

Merits of document management system 'a paperless office?'

The merits of a document management system depends largely on the quality of the staff.  The ones that were slack in doing paper filing tend to be the ones doing it electronically too.

Since the implementation of our DMS we haven't looked back either ever piece of post, email etc has been lodged on the system albeit a little later than we all would have liked. 

However the problem arises is putting historical information the system.  We had kept every file since 1996 whether the client was active or not.  We had over 250 filing cabinets and another 250 bankers boxes to file and guess what over 3 years later employing 2 full time members of staff we are nowhere near the end...

I don't even want  look at what client books and records might be in the basement.

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08th Apr 2014 12:31

Good points and useful discussion

However it is annoying to see so many typos in the text!

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08th Apr 2014 12:48

Struck off company records, statutory books etc

Where an England & Wales company has been struck off, we fax the Treasury Solicitor's Bona Vacantia department (TSol). Our standard fax lists the items we are holding for the company, eg statutory registers, minute books, old financial records, employers' liability insurance certificates or whatever. These are property of the former company and therefore comprise bona vacantia.

We advise TSol that the property is being held for them to collect, at their expense, in the next (say) 6 weeks, after which we will discard it (note - no promise to shred or securely dispose of).

We usually receive by return a communication that TSol is not interested in these items. When we have seen this, we can dispose of them.

TSol will also file a waiver on the dissolved company's record at Companies House. This will provide evidence that they do not want these items.

This procedure is only applicable to companies that have not been liquidated, where of course we should obtain the liquidator's instructions as to retention or disposal.

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08th Apr 2014 13:19

Clients' Records

I return all my clients' records to them after completion each year.  All wrapped up and bundled nicely with a 'keep until' date marked clearly on them.  My own working papers with regard to each client are kept gathering dust!

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08th Apr 2014 15:26

scanning documents, best format?

Whilst scanning documents and shredding originals sounds tempting I did start work on an Apricot with 5.25" floppies and a microfiche! Having worked my way through PCW logic, dos and zip drives, I am very wary of ending up with important paperwork saved in what might be an unreadable form in xxxx years time. What is the best, most "future proof" format in which to save scans, eg. should it be as a pdf , a jpeg? I have shown my age by admitting to earlier formats but I do like to have a physical piece of paper (much to my younger clients derision who have not yet been left with unreadable discs!) but am willing to move the ever growing pile of paper into the digital age, just don't want to end up with the equivalent of a betamax (which was the better format!).

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By DMGbus
11th Apr 2014 08:57

Data back up 2 issues.

Backing up of data has two specific issues to be addressed:

(1) File format (eg. pdf, jpg which have been good for the past several decades)

(2) Hardware format (eg. external HDD, Flash Memory, tape)

 

.jpg and .pdf seem good at present and no sign of them becoming unreadable anytime soon.     However in many decades time whilst this might be irrelevant to professional data, it will be relevant for historical research data for future historians.   My view is avoid tailor-made brand specific file formats as these may well disappear with time.

Regarding hardware I work on the basis that hard disk drives (HDD) may have an operating life of 3 years, so always have at least three in use for back up at one time and bbe prepared to copy data from one of the two "good" drives when the tghird one fails.   Flash memory has issues that dissuade me from regarding it as a reliable and viable option on its own.

 

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