What records must UK businesses keep to meet Corporation Tax compliance in the 2024/25 financial year?

Understanding Corporation Tax record-keeping in 2024/25

UK Corporation Tax compliance isn’t only about calculating the right tax and paying it on time. It also depends on keeping the right records, in the right format, for the right period, and being able to explain how the numbers in your Company Tax Return were produced. For the 2024/25 financial year, the underlying principles are familiar: you must keep adequate records to support your company’s profits, losses, allowances, reliefs, and tax position. What changes in practice is the growing expectation that businesses can produce clear audit trails, retain digital evidence, and reconcile their accounts to tax computations efficiently.

This article explains the records UK businesses must keep to meet Corporation Tax compliance in the 2024/25 financial year. It focuses on what HMRC generally expects companies to retain, what commonly triggers questions during compliance checks, and how to build a record-keeping system that stands up to scrutiny. It is written for limited companies and other entities within the scope of Corporation Tax, including non-UK companies that have UK Corporation Tax obligations.

Although the term “records” can sound like a dull administrative burden, good record-keeping is often the difference between a smooth filing season and a stressful back-and-forth with advisers or HMRC. It can also protect your business: if you can prove the facts behind your tax return, you reduce the risk of penalties, avoid costly estimate-based assessments, and save time during queries.

Who needs to keep Corporation Tax records?

Corporation Tax applies to a range of organisations, most commonly UK limited companies. But it can also apply to clubs, co-operatives, associations, and other bodies with taxable profits. In addition, some non-UK companies may have Corporation Tax responsibilities if they are trading in the UK through a permanent establishment or have other UK Corporation Tax exposures. Regardless of size, sector, or whether you use an accountant, the legal responsibility to keep records sits with the company and its directors.

If your business is incorporated, you should assume that HMRC expects you to keep records supporting your statutory accounts and your Company Tax Return. Even where the company is dormant or has minimal activity, you should keep evidence showing the company’s status and any transactions that occurred. For groups and companies with more complex arrangements—like intra-group loans, intellectual property, or cross-border transactions—more detailed documentation is usually required.

What “records” means for Corporation Tax purposes

In practical terms, Corporation Tax records are the evidence you rely on to prepare:

1) your statutory accounts (profit and loss account, balance sheet, notes, and relevant disclosures), and

2) your tax computation and Company Tax Return (including any schedules, claims, and elections).

HMRC expects that records are complete, accurate, and sufficient to show how you arrived at the taxable profit or loss figure. That means you should keep not only high-level summaries (like a trial balance or management accounts), but also source documents (like invoices and contracts) and supporting calculations (like capital allowances schedules or interest restriction computations where applicable).

When HMRC reviews Corporation Tax compliance, it often looks for an audit trail. An audit trail links the tax return back to the statutory accounts, from the statutory accounts to the underlying bookkeeping, and from the bookkeeping to the source evidence. A strong audit trail reduces the need for lengthy explanations and helps you respond quickly if a question arises.

Core financial records every company should keep

Most companies should maintain a baseline set of accounting records that would be considered “adequate” for Corporation Tax purposes. These typically include:

Sales and income records

You should retain evidence of all income the company receives or earns, including:

- Sales invoices issued to customers (or equivalent receipts and billing records)

- Credit notes and adjustments

- Evidence of income not invoiced in the normal way, such as commission statements, platform settlement reports, royalties, grants, or rent schedules

- Bank statements showing receipts, matched to customer accounts where possible

- Records supporting cut-off and timing, especially around the year end (for example, deferred income, accrued income, or long-term contracts)

If your business sells online, retain platform statements, payment processor reports, and order-level data. If you use subscription billing or collect deposits, keep schedules explaining how revenue is recognised and when amounts are treated as earned.

Purchases and expense records

You should keep records of costs and expenses, including:

- Supplier invoices and receipts

- Credit notes and supplier rebates

- Evidence of recurring expenses (rent, utilities, software subscriptions, insurance)

- Expense claims and supporting receipts for employee and director expenses

- Contracts or agreements that explain the nature of a cost, especially for large or unusual items

- Records supporting the business purpose of expenses where this might be questioned (for example, travel, entertaining, mixed-use items, or director-related costs)

For Corporation Tax, the key theme is that expenses must generally be wholly and exclusively for the purposes of the trade to be deductible. Good record-keeping supports that business purpose. This doesn’t mean every receipt needs a novel written on it, but for higher-risk categories it helps to keep brief notes, meeting agendas, or links to relevant projects.

Banking and cash records

Bank statements are foundational. You should retain:

- Bank statements for all business accounts (including foreign currency accounts)

- Loan account statements, if applicable

- Credit card statements used for business spending

- Records of cash transactions, including petty cash logs and cash-up sheets where relevant

- Evidence for transfers between accounts and explanations for unusual movements

For many compliance checks, HMRC will request bank statements to test the completeness of income and to understand payments to directors, shareholders, and connected parties.

Payroll and employment records

Even though PAYE and NIC are separate regimes, payroll records matter for Corporation Tax because staff costs are often a major deduction and because the tax treatment can change depending on whether something is salary, bonus, benefit, or reimbursed expense. Keep:

- Payroll reports (gross pay, deductions, employer contributions)

- Payslips and P60/P11D information where relevant

- Employment contracts, bonus schemes, commission plans, and share-based payment arrangements

- Evidence of pension contributions (including employer payments)

- Records supporting termination payments and settlements

- Timesheets or project records if they support R&D claims or recharges

Where directors are paid irregularly or through year-end adjustments, keep clear board approvals and schedules showing how amounts were calculated and when they were authorised.

VAT records and reconciliations

VAT is a separate tax, but VAT records often underpin the integrity of your accounting. Keep:

- VAT returns and the workings behind them

- VAT account reconciliations to the general ledger

- Evidence supporting partial exemption calculations, reverse charge treatments, or VAT groups

- Import/export documentation where relevant

For Corporation Tax, VAT errors can distort revenue and costs in your accounts. Having VAT reconciliations helps you demonstrate that figures are reliable.

Statutory accounts and working papers

You should retain the final signed accounts for the period, but also the working papers used to prepare them, such as:

- Trial balance and nominal ledger

- Year-end journals and supporting schedules

- Accruals and prepayments listings

- Fixed asset register

- Debtors and creditors listings

- Stock valuations and inventory counts (if applicable)

For smaller companies, the accounts preparation process might be streamlined, but you should still keep a clear record of adjustments made at year end.

Tax-specific records to support the Company Tax Return

In addition to “normal” accounting records, you should keep documents and calculations that directly support the tax computation and any claims made in the return. In 2024/25, HMRC’s expectations around documentation remain high, especially where the company benefits from reliefs or deductions that require evidence.

Corporation Tax computation and reconciliation

Keep the full tax computation, including:

- A reconciliation from accounting profit to taxable profit

- Adjustments for disallowable expenses and non-taxable income

- Treatment of capital items and depreciation add-backs

- Capital allowances calculations

- Loss utilisation schedules (carried forward, carried back, group relief, etc.)

- Any claims, elections, and supporting statements

It is good practice to store a “bridge” that shows how the figures in the accounts feed into the computation, especially where there are multiple income streams or complex adjustments.

Capital allowances and fixed assets evidence

Depreciation in accounts is not generally deductible for Corporation Tax; instead, tax relief is usually given through capital allowances. To support capital allowances, keep:

- A fixed asset register with acquisition dates, costs, and descriptions

- Supplier invoices for asset purchases

- Evidence of disposal proceeds (sales invoices, settlement statements)

- Classification evidence (for example, whether expenditure is plant and machinery, integral features, cars, or structures and buildings)

- Capital allowances schedules showing pools, additions, disposals, and claims

- Any evidence supporting special rate treatment, business use, or private use restrictions

If you claim reliefs like full expensing, annual investment allowance, or structures and buildings allowance where relevant, keep documentation that shows the nature of the asset, the date it came into use, and how the qualifying expenditure was determined.

Loan interest, finance costs, and loan agreements

Finance costs can be a common area of enquiry, particularly in connected-party situations. Keep:

- Loan agreements, facility letters, and any amendments

- Interest calculation schedules and statements

- Details of arrangement fees and how these were treated

- Evidence for refinancing or early repayment charges

- Board minutes approving borrowing and major financing decisions

- Documentation supporting transfer pricing positions for connected loans (where applicable)

For groups and larger companies, interest deductibility can be affected by specific regimes (such as corporate interest restriction). Where these apply, retain detailed computations and group-level documentation.

Dividends and distributions documentation

Dividends are not usually deductible for Corporation Tax, but they matter for the integrity of your accounts and for director/shareholder relationships. Keep:

- Dividend vouchers

- Board minutes or resolutions declaring dividends

- Evidence of distributable reserves calculations, where needed

- Share registers and details of share classes (to show entitlement)

- Bank evidence of payments made

Clear dividend paperwork helps demonstrate that payments to shareholders were properly classified and lawfully made.

Director’s loan account records

Director’s loan accounts can create both Corporation Tax issues and personal tax issues. For Corporation Tax compliance, maintain:

- A director’s loan account ledger showing all advances, repayments, and balances

- Supporting evidence for each transaction (bank transfers, expense claims, invoices)

- Loan agreements if the company lends to a director or shareholder under formal terms

- Interest calculations where interest is charged or should be considered

- Evidence of repayment timing where specific tax charges may apply to outstanding balances

Keeping the director’s loan account reconciled throughout the year prevents unpleasant surprises at year end and reduces the risk of misclassification.

Related party and connected party transactions

Transactions with directors, shareholders, family members, group companies, or other connected parties often attract attention. Keep:

- Contracts and terms of trade for connected-party transactions

- Pricing evidence showing terms are commercial (quotes, benchmarking, transfer pricing support where relevant)

- Intra-group agreements (management charges, service agreements, IP licences)

- Intercompany reconciliations and confirmations of balances

- Board approvals for significant related party transactions

Even for smaller companies not formally within transfer pricing documentation expectations, having a basic file that shows how prices were set can be helpful.

Business travel, subsistence, and motor expenses

These are classic compliance-check areas because they can be mixed-purpose. Keep:

- Receipts for travel and accommodation

- Itineraries, meeting notes, and business purpose summaries

- Mileage logs if using mileage claims

- Vehicle lease and finance agreements

- Insurance, maintenance, and fuel receipts allocated to business use where appropriate

- Details of company cars and benefits if provided

A simple system—like a digital expense tool with a “purpose” field—can make a big difference when you need to justify deductions.

Records for reliefs and special claims commonly used in 2024/25

Many companies reduce their Corporation Tax liability through reliefs and claims. HMRC generally expects the company to retain evidence that eligibility conditions are met and that figures were calculated correctly. Below are key examples where documentation quality matters.

R&D tax relief records

Where companies claim R&D relief, HMRC expects robust project-level evidence. Keep:

- A narrative describing the scientific or technological uncertainty and advances sought

- Project plans, technical documents, design iterations, test results, and development logs

- Timesheets or alternative evidence supporting staff time allocations

- Payroll data mapped to projects and roles

- Subcontractor and external specialist invoices, with contracts describing the work

- Apportionment workings for indirect costs (software, utilities, consumables) where included

- Governance documents showing who approved the claim and when

Even if your claim is prepared by an adviser, you should retain the underlying evidence and the calculation model. If HMRC asks questions, it will usually want both the “story” and the “numbers” backed by contemporaneous records.

Creative industry tax reliefs (where relevant)

If your company claims reliefs in creative sectors (such as film, television, animation, video games, theatre, or orchestras), keep:

- Certification or qualifying documentation as applicable to the regime

- Production accounts and cost reports

- Contracts with cast, crew, studios, and service providers

- Evidence supporting qualifying UK expenditure calculations

- Schedules reconciling production spend to the accounts and to the claim

These claims can be technical, so a dedicated claim file is strongly recommended.

Loss relief and loss utilisation evidence

Losses can be valuable, but you must track them properly. Keep:

- A loss schedule by accounting period and by type (trading, non-trading loan relationship deficits, capital losses, etc.)

- Computations showing how losses were calculated

- Evidence of claims to carry back or carry forward losses

- Group relief documentation if losses are surrendered within a group

- Supporting evidence for changes in ownership or major changes in trade where restrictions might be relevant

Loss records should be maintained year after year because they affect future tax computations. A common compliance failure is losing track of what has already been used.

Charitable donations and community payments

Qualifying charitable donations can be deductible for Corporation Tax. Keep:

- Donation receipts or acknowledgements

- Evidence that the recipient is a qualifying charity where appropriate

- Board approvals for significant donations

- Accounting entries showing the donation and its treatment

For sponsorship or marketing arrangements, keep contracts that show whether payments are donations or business expenses.

How long must records be kept?

Retention periods matter because Corporation Tax compliance isn’t only about filing; it is also about being able to prove what you filed. Companies should keep Corporation Tax records for a sufficient period to meet legal requirements and to respond to potential HMRC enquiries. In practice, you should keep records for at least the minimum statutory retention period that applies to company accounting records, and you should consider whether longer retention is sensible given your business’s circumstances.

Many companies adopt a policy of keeping accounting and tax records for at least six years from the end of the relevant accounting period, and often longer where there are long-running matters like loss carryforwards, capital allowances pools, property transactions, or intra-group arrangements. Some records can remain relevant for much longer than the year they were created, especially if they support tax reliefs that are used over time or if they relate to assets that are still owned.

A practical approach is to keep:

- Annual “core” records (accounts, tax returns, computations) for the full retention period

- Permanent file documents (incorporation documents, share registers, long-term agreements) indefinitely or as long as relevant

- Asset and property documents for as long as you own the asset and for a period after disposal

If you are ever unsure, keeping records longer is usually safer than deleting too early, provided you store them securely and comply with data protection obligations.

Digital record-keeping, software, and audit trails

For 2024/25, the direction of travel in tax administration continues toward digital processes. Even where a company is not required to keep specific digital formats for Corporation Tax, digital record-keeping is increasingly the norm. HMRC expects businesses to be able to provide records promptly, in a usable form, and with traceability.

To build a strong digital record-keeping system, focus on:

- A consistent chart of accounts so transactions are categorised correctly

- Clear links between transactions and supporting documents (invoice images, PDFs, emails)

- Version control for spreadsheets used in tax calculations

- Secure storage with access controls (especially for payroll and personal data)

- Backups and disaster recovery plans

A common weak point is “spreadsheet sprawl” where critical tax calculations exist in a single person’s laptop without a reliable file structure. If your tax position depends on a spreadsheet (for example, a capital allowances schedule, loss tracker, or R&D calculation), treat that spreadsheet like a key business record: document it, lock it, back it up, and keep clear notes.

Records that support year-end cut-off and accounting judgments

Corporation Tax computations often rely on accounting judgments: accruals, provisions, impairment, revenue recognition, and valuation. HMRC can ask for evidence supporting these judgments. Keep:

- Inventory count records and valuation methodologies

- Debtor aging reports and bad debt assessments

- Contracts and correspondence supporting revenue recognition decisions

- Provisions calculations (for example, warranty provisions or legal provisions) and supporting evidence

- Documents supporting significant estimates, such as management forecasts used for impairment testing

These records are particularly important if your results fluctuate significantly, if you have large year-end adjustments, or if you operate in sectors with complex revenue models.

Groups, subsidiaries, and intercompany documentation

If your business is part of a group, additional records become critical. Keep:

- Group structure charts and details of ownership changes

- Intercompany agreements and recharge mechanisms

- Transfer pricing support where relevant

- Intercompany balance confirmations and reconciliations

- Group relief allocations and consent documentation where applicable

- Consolidation workings if you prepare group accounts

Group situations often involve timing differences and cross-charges that need careful explanation. A clear policy document that explains how recharges are calculated and applied can save a lot of time later.

Property, leases, and capital projects

Property and leases can affect taxable profits through rent deductions, lease accounting, capital allowances, and disposals. For companies with property interests or significant lease commitments, keep:

- Lease agreements, renewal terms, and side letters

- Rent schedules and service charge statements

- Records of dilapidations and repair costs

- Capital project documentation, including contractor invoices and project breakdowns

- Evidence separating repairs (revenue) from improvements (capital), where this distinction matters

- Sale and purchase agreements for property disposals and acquisitions

Where you undertake major refurbishments, a well-organised cost breakdown helps you determine which amounts are capital for allowances purposes and which are revenue deductions.

Share issues, investments, and financing events

Equity and financing events can affect Corporation Tax, accounts disclosures, and sometimes relief claims. Keep:

- Share allotment documents, subscription agreements, and filings

- Updated cap tables and share registers

- Valuation reports where relevant (for example, certain share transactions)

- Investor agreements and side letters

- Warrant or option documentation and share-based payment records

- Evidence of transaction costs and how they were treated

For companies raising funds, these documents often exist across multiple advisers and platforms. Bringing them into a single corporate “permanent file” makes later compliance far easier.

Common compliance pitfalls and how records prevent them

Many Corporation Tax problems are not caused by sophisticated avoidance schemes; they stem from missing paperwork and weak processes. Here are common pitfalls and the types of records that help prevent them:

Pitfall: Unreconciled director and shareholder transactions

When personal and business spending mix, or when director loan accounts aren’t updated, the tax return may misstate deductions or omit tax charges. Maintaining a clean director loan ledger, supported by bank evidence and receipts, reduces this risk.

Pitfall: Claiming expenses without proof of business purpose

Travel, subsistence, and mixed-use items are often challenged. Storing receipts alongside short business-purpose notes and meeting details can make the difference between an accepted deduction and a disallowance.

Pitfall: Capital/revenue misclassification

Costs incorrectly treated as revenue can lead to over-claimed deductions; costs incorrectly capitalised can delay relief. Keeping project documentation and clear asset invoices supports the correct treatment.

Pitfall: Weak support for relief claims

Claims like R&D relief can fail if the company can’t show contemporaneous evidence. Building a claim file during the year—rather than recreating the story after the fact—improves accuracy and defensibility.

Pitfall: Missing documentation for connected-party pricing

Even small companies can face questions if connected-party transactions look unusual. Contracts, benchmarks, and board approvals show that arrangements are commercial and properly considered.

What to do if records are incomplete or missing

If you discover gaps in your records during the 2024/25 cycle, don’t ignore them. The earlier you fix record-keeping issues, the easier they are to resolve. Practical steps include:

- Reconstruct missing invoices or statements by requesting copies from suppliers, banks, or platforms

- Use email trails, delivery confirmations, and contracts to support transactions where receipts are missing

- Document explanations for unusual items with a dated internal note (what happened, why, and how you determined the amount)

- Implement forward-looking controls so the same issue doesn’t recur (for example, mandatory receipt capture or approval workflows)

Where a figure involves estimation, keep the method, assumptions, and calculations. HMRC does not automatically reject estimates, but it will expect them to be reasonable and well supported.

Building a “compliance-ready” record-keeping checklist

To make Corporation Tax compliance smoother in 2024/25, consider building a checklist that aligns with your year-end process. A strong checklist typically includes:

- Monthly bookkeeping close and bank reconciliations

- Quarterly VAT reconciliations to the ledger

- Payroll reconciliation and approvals for director pay and bonuses

- Fixed asset register updates and a capital expenditure review

- Director loan account reconciliation

- A file for significant contracts and unusual transactions