What are statutory records and why are they important?
When forming a limited company, you are required to keep what is classed as ‘statutory records’. These records will include all your company filings, name of company registers and confirmation statements (previously called your company’s ‘annual returns’) to name a few. Here we will breakdown why it is essential to keep on top of these records, writes Christian Hickmott, CEO at Integro Accounting.
What are statutory records?
Each limited company across the UK is legally required to keep statutory records. They are called statutory records for the exact reason that they are mandatory. These are required to be kept up-to-date should the information be required from HMRC.
You must keep records for six years from the end of the last company financial year they relate to. However, the retention period can be longer than six years if they show a transaction that covers more than one of the business’s accounting periods; or something that has been purchased and is expected to last more than six years. An example of this can be large equipment or machinery.
The statutory records will include:
Register of members
This is the register of your shareholders (members) including their name, address, number of shares; class of shares they hold; along with the date they were registered as a shareholder (or stopped being one). It will also include the sum amount paid on shares to each shareholder.
Register of directors
As with shareholders, there must also be an up-to-date register of directors. This will include their name (including any former name), an address for official post to be sent to, their nationality, date of birth, occupation and area of the UK where they live.
Should a shareholder wish to see this register they are entitled to do so, free of charge, on request. Other members of the public can also request to view the register but may incur a fee to do so. It is a legal requirement for the company to comply with such requests within 14 days and if they don’t they may get a fine and be compelled to allow the register to be inspected.
Register of Directors’ Usual Residential Addresses and…
In addition, you also need to keep a Register of Directors’ Usual Residential Addresses, Register of Secretaries (only if a Company Secretary has been appointed), a Register of People with Significant Control (containing information on anyone who has significant interest or control in a company); and Register of Charges (albeit only if there are any charges to record i.e. securities such as mortgages or debentures).
If you don’t have these records your company could appear unlawful in the eyes of HMRC.
Why do I need to keep statutory records?
You need to have these records up-to-date and available in case your accounts require inspection by the tax authority or if its officials run a compliance check.
The records provide a historical and current record of your company’s ownership and the people who are responsible for running it. This is essential if, for example, there is a disagreement surrounding share ownership, share transfers, or inheriting shares. In addition, it will be crucial to have these statutory records should you wish to sell the company or have to put the business through insolvency proceedings.
Where should I keep these records, and how?
Your records can be held at your company’s registered office or an alternative address that Companies House must be informed of.
How you keep your company’s statutory records is entirely up to you. So these legally required pieces of information for your company can be recorded digitally, or on paper.
Therefore as long as you keep them up-to-date, it doesn’t really matter where you keep the records, but somewhere safe seems sensible! The records can be located with your accountant, stored on a bookkeeping software programme, available on a record-keeping app or housed in a filing cabinet.
As with most things associated with running your own business, accuracy and timeliness are key with statutory records. Positively, these records aren’t complicated, they just need to be held and updated so they are correct at any given time. If there’s anything you’re unsure of, talk to your accountant and they will be able to set you up with all the correct information or even suggest systems for managing your statutory records more efficiently!