Section A

What is the statutory requirement for a self-employed individual (sole trader) regarding the retention of business records for tax purposes?

Answer options:

Records must be kept for 1 year after the 31 January following the end of the tax year.

Records must be kept for 4 years from the end of the tax year.

Records must be kept for 5 years after the 31 January following the end of the tax year.

Records must be kept for 6 years from the end of the accounting period.

How to approach this question

Recall the record-keeping time limits: 1 year for non-business individuals, 5 years (from 31 Jan) for self-employed, 6 years for companies.

Full Answer

C.Records must be kept for 5 years after the 31 January following the end of the tax year.✓ Correct

A self-employed individual must retain their business records for 5 years after the 31 January following the end of the tax year to which the records relate. For example, for the 2023/24 tax year, records must be kept until 31 January 2030. Companies must keep records for 6 years from the end of the accounting period.

Common mistakes

Confusing the sole trader rule (5 years from 31 Jan) with the company rule (6 years).

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Practice the full ACCA TX — Taxation Practice Exam 4

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