Document Retention. Overview Filing classification Timescales for document retention by document type Practical Filing

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1 Document Retention Overview Filing classification Timescales for document retention by document type Practical Filing

2 Contents Overview 01 Filing classification 02 Timescales for retention by document type 03 Practical filing 07

3 1 1. Overview Out of interest, as a starting question for this paper, does your company still have an Accident Book dating back to 1992? If so, where would you be able to find it? How long would it take you to lay your hands on it? How long do you think you re expected to keep it for? Whilst the likelihood of you ever needing to retrieve such a document is somewhat minimal, we all suffer from an inherent fear of throwing such items away. In the back of our minds we re afraid that the week after we feed it to the shredder, Mike from Accounts (who left in 1995) might come back with a claim for latent mental distress caused by an accident at work, catalogued in that very book. Have a think about the extent of trouble that could result from destroying records through bad advice, ignorance or lack of storage space: breaking the laws on retention periods fines from authorities prosecution in extreme examples exposure to costly claims through unsupported defence sloppy scans or bad electronic indexing for documents held electronically with originals destroyed and no way of reparation The temptation is to keep an original copy of every document we think important or potentially useful at some point down the line much rather overkill than being caught out, surely? By keeping everything, although we cover ourselves against all eventualities, even small organisations are struggling with the sheer volume of material held in storage. So how do we get a handle on the situation? By getting informed and taking sensible measures to keep everyone happy, from the VAT man to your Filing Administrator. This paper should show you how.

4 2 Document Retention 2. Filing classification Before you decide how to proceed with your filing organisation, logical first steps are to undertake some kind of audit to find the extent of your original problem. 1. Exactly what documents are you storing? 2. How much space do you give to storage of each file category? 3. What formats are the files in paper, film, plans? 4. How old are the documents you keep, and are they in trackable date order? 5. Do you file items by their type (eg contract), or by their subject matter (ie Land Development no 672) 6. What policy do you currently implement for file destruction? 7. How secure are the conditions in which you keep your files? The answers to the above questions will greatly inform how you proceed with a filing overhaul, or a possible conversion to electronic document management. They ll also help you sort out what you re holding without need, and give you a little more confidence to get moving on streamlining your filing. For easiest classification in so far as timescales for retention go, it can help to organise your documents into the following categories: Agreements Taxation Insurance Property Banking Technical & Research Accounts Employee Other Whilst these are broad (read on for a more in-depth look at each category), and there will be an element of cross-over between them, most documents will fall pretty definitely into an area to assist in your organisation.

5 3 3. Timescales for retention by document type Quick disclaimer: Whilst the information given here is correct to the best of our abilities, and based on thorough research and professional knowledge, it s given in a general context. Specific companies and industries are subject to more stringent regulations on documentation, and further retention periods and methods may apply. We recommend checking with a document specialist such as DCS, or your legal adviser before destroying any documentation. As you ll understand, DCS accepts no responsibility for loss or damages incurred by an individual or company acting on the advice contained in this document. 3.1 Agreements Contracts With customers, suppliers or third party agents. Licensing agreements. Rental agreements. Indemnities and guarantees both offered and taken Following the termination or expiry of the contract, 6 years. The 6 year period is recommended to protect you as this is, generally, the timeframe during which any action or proceedings based on a contract may be brought. If a contract is executed as a deed, the limitation period is extended to 12 years. Some actions for latent damage may be brought up to 15 years after damage occurs. Recommendation to check with a lawyer before permanently destroying any paper copies. Major agreements Permanent

6 4 Document Retention 3.2 Property Deeds of Title Permanently, or until the property is sold or disposed of. Leases (both held and offered) 15 years after their expiry. See Section 14B of the Limitation Act 1980 for more information. 3.3 Accounts Company Accounts (Providing such information as complies with Companies Acts 1995 & 1989.) Public companies minimum of 6 years from date made. Private companies minimum of 3 years from date made. Retention periods based on legal requirements of the Companies Act Best practice might suggest that private companies retain accounts for 6 years, even though not strictly required to do so by law. 3.4 Tax Supporting documentation for returns VAT. 6 years. VAT Act 1994 s58 and Schedule 11, paragraph 6. Corporation Tax. 6 years from the end of the period for which required to deliver a tax return. Finance Act 1998 Schedule 18, paragraph PAYE. Records not required by the Inland Revenue should be kept for 3 years after the end of the tax year to which they relate. Payroll records should be kept for 5 to 6 years. Income Tax (PAYE) Regulation 2003, Reg 97. Unincorporated businesses and individuals. 5 years from 31 January of the year following the year of assessment. Tax Management Act 1970, Sections 12 & 15.

7 5 3.5 Banking Records Cheques, bills of exchange, bank statements. 3 years limited companies. 6 years public companies. Instructions to banks. 6 years after ceasing to be effective. 3.6 Employee Records Staff personal records. 6 years after employment ends. Limitation Act Applications for jobs where the candidate is unsuccessful. 3 months after notifying the unsuccessful candidate. Discrimination Acts 1975 & 1986, and Race Relations Act 1976 recommend 6 months. Payroll/wages. 6 years from the company year end. 5 years after 31 January of following year of assessment for unincorporated entities. Finance Act 1998, Schedule 18, paragraph 21. Tax Management Act 1970, Sections 12 & 15. Expense accounts. 6 years. Labour agreements. 10 years. Best practice recommendation. Works Council minutes. Permanently. Sickness records. 3 years after the end of each tax year for Statutory Sick Pay purposes. Statutory Sick Pay (General) Regulations 1982 Reg 13. Accident books. 3 years from the date of each entry. Health and Safety records. 3 years. Time periods extended for employees exposed to hazardous substances.

8 6 Document Retention 3.7 Insurance Policies. 3 years after lapse. Claims correspondence. 3 years after settlement. Accident reports and relevant correspondence. 3 years after settlement. 3.8 Technical & Research Records and reports. 12 to 15 years after requirements have ended. Drawings and other data. 12 to 15 years after requirements have ended.

9 7 4. Practical Filing Having negotiated the minefield of classifying your documents, auditing quantities held and allocated retention times for all, the question of practical storage for the future needs to be addressed. Implementing a system that reduces the need to re-visit this process is ideal. 4.1 Paper Systems If you find that the volume of documents you retain is at a manageable level to maintain a paper-based storage system, then obviously the key is organisation. Boxing up and marking retention deadlines with documents classed by category is one obvious way. Disseminating retention deadlines to staff can aid day to day filing, and can help prioritise as you go forward. If you rely on the paper system, then don t ignore some of the associated risks take steps to protect your files. Run through a few disaster scenarios such as fire, flood and theft, and see where your business might be exposed were you to lose access to your files, either temporarily or permanently. With paper systems there are also the possibilities of human errors to overcome. No-one s perfect, and no two people s filing systems are the same! When you ve got 10 minutes to locate an invoice from 2001, you don t want to be turning out hundreds of box files, or driving to another site to look for it! Whilst you may have insurance for disaster situations, there s little to compensate for the costs of business interruption and the consequences of missing files. 4.2 Electronic systems Paper based filing can require so much space, and so many human resources to maintain and manage them, that for large organisations, they re becoming increasingly impractical. The alternative is to adopt a switch to an electronic system, whereby existing paper documents are scanned and held on a searchable database computer system. New documents are usually generated on PC, and so easily saveable to the system, and incoming paper documents from external sources are scanned for electronic retention thereafter. By implementing a thorough system of indexing (standard fields with searchable options) and by ensuring that the software solution suits the organisation and types of documents held, the systems can bring a multitude of benefits not least in reducing the bulk of documents that must be retained by law, and by facilitating their destruction once retention periods have passed. For cautious companies, whilst holding documents for longer on paper can involve enormous space implications, to hold documents electronically costs only in server space. Further information about adopting an electronic filing system can be requested from DCS, and viewed on / downloaded from our website DCS is a dedicated information capture and management solution company that counts the Ministry of Defence, BAA, Transco and the Home Office amongst its clients. Helping companies preserve and manage their documents is their core business. From compact storage to complete document management solutions, Data Capture Solutions are an independent, trusted industry name with ISO 9001 accreditation across all areas of business. Friendly, knowledgeable staff provide a full service from initial consultation through to final delivery and ongoing support to ensure a workable solution and client satisfaction. For further information and consultation on your document management requirements please contact Data Capture Solutions: 345 Edinburgh Avenue Slough, Berkshire SL1 4TU, UK Tel: Fax:

10 Data Capture Solutions 345 Edinburgh Avenue Slough Berkshire SL1 4TU, UK Tel: Fax: