Can I digitize my financial records for Tax purposes?
April 9, 2008 12:15 AM   Subscribe

What are the UK legal system rules and regulations around storing financial, legal and official paperwork as scanned digital copies?

I am currently in the process of scanning in and shredding a lot of old paperwork, notes and information which I have been storing for years - My priority at the moment is all my handwritten notes and personal correspondence (that which I'm not keeping physically for sentimental value).

I would like to begin scanning and storing all my "official" documentation - Bank statements, utility bills, mobile bills, invoices etc. but I am unsure of what I can and cannot do, and what is acceptable from a legal point of view.

I am part-time self-employed, and need to keep records of my documentation for 7 years but would like to keep everything as digital copies.

Can anyone enlighten me on the legal status of scanned documents in the UK? Can they be used as reference in legal and tax issues? Are there any precedents or recommendations on file formats or quality?
posted by Scramblejam to Law & Government (7 answers total) 1 user marked this as a favorite
 
IAAL, IANYL, etc.

Most utility companies and banks now offer a paperless service as an alternative to printed documents. So there is no reason why you could not either scan the documents or switch to a paperless option where you could access past bills and print them off. I can see no reason why scanned copies would not be acceptable should you need to produce them at some point in the future, except in certain circumstances.

For example, if you wanted to open a new bank account, you would need to produce an original of at least two documents showing your name and address, such as your Council Tax bill or a utility bill. A bank would not accept a scanned copy, because of forgery/money laundering concerns.

Scanned documents are usually acceptable to tax authorities, provided originals could be sourced at some stage if there's a problem. But if you're not talking about obscure documents, but bog-standard bank statements and utility bills, this wouldn't be a problem as originals could be sourced from the bank/company if need be. The taxman refers to you keeping 'records', and this includes digitized records.

I am not sure what you mean where you mention 'legal' issues. BSI DISC PD0008 is the current British Standard document relating to 'Legal Admissibility and Evidential Weight of Information Stored Electronically'. It sets a benchmark for procedures that business should follow in order to achieve best practice, and therefore, legal admissibility of their electronic documents.

You can find more information on the admissibility of scanned documents here where there are several .pdf files with probably all the detail you'll need about this.
posted by essexjan at 12:48 AM on April 9, 2008


IANAL.

Further to the above remember to follow the Data Protection Act where it applies: depending on the amount of sensitive or personal data in the paperwork you're storing it you may need to a) inform the users their information will be stored for your purposes for X months/years/whatevers, and b) implement access-level based security around it so to provide a reasonable lack of sniffing and peering from other people and/or employees, and c) possibly even a way for users to call up what you've got on file, though provided you can produce it on demand in some fashion that's probably less of an issue.
posted by stelas at 1:23 AM on April 9, 2008


Whoops. I've just noticed it's all your own records, so as the Data Controller you're kind of allowed to do what you like on that front. Sorry.
posted by stelas at 1:25 AM on April 9, 2008


Hi guys,

This is great advice - I hadn't considered retention of information etc. Those PDF files that were recommended were a goldmine of information, and i have bookmarked them for further research.

I think I am going to need to generate a digitization policy to help me control what and when things get scanned, so I am in full compliance with the law.

As mentioned by essexjan, there are often requirements for specific paper documents - when setting up bank accounts etc. Can anyone advise or suggest on what I could/should retain for these purposes? For example:

Most recent Utility Bill for each utility
Last 12 months of bank records
ISA Statements for 3 years etc.

I shall actively be pursuing this information myself, but any pointers will be very gratefully received.
posted by Scramblejam at 2:44 AM on April 9, 2008


(Trying to make up for the slip-up...)

Generally speaking, to prove your identity at a snap you'll want two utility bills from the last three months that display your name and home address, and something more solid such as a photocopy of the back page of your passport, driving licence, or birth certificate. For taxes, recent bank or savings statements can help prove your savings balance.

In my opinion, though, I'd be wary about retaining this level of information digitally, especially if you then keep the files together. All someone would need to do is to smash+grab your hard drive - which is a much more lucrative and likely target for thieves than a collection of documents hidden somewhere (dark and gloomy box file in a corner of the attic can work wonders, I always find) - and they've suddenly got a treasure trove of information to pretend to be you with.

The very best way I can think offhand to handle this is to purchase a USB pendrive and apply some decent encryption software such as TrueCrypt to it. When you scan and digitize your documents, don't put them on your hard drive; instead, shift them straight onto your encrypted pendrive. Then, when you're done with that session of archiving stuff, take the pendrive away from the box and stick it in the back of a drawer somewhere. The only problem I can think of with this method is that you'd need a computer with TrueCrypt (or whatever you're using) to get the files back off it again, but at least if someone steals only one of the two halves of the equation, they're not going to get at your files easily.
posted by stelas at 5:01 AM on April 9, 2008


there are often requirements for specific paper documents - when setting up bank accounts etc. Can anyone advise or suggest on what I could/should retain for these purposes?

- Your council tax bill or water rates for the previous and current year. These will show continuity at an address (or, if you've recently moved, your last address, which presumably a fraudster would not know but which would show up if the bank did a credit search).

- A recent gas/electricity/phone bill. My rule of thumb is that I keep the paper bill until the new one arrives, then I shred the previous one.

- Three months' bank statements. Again, scan/shred paper ones once a new one arrives.

- Three months' payslips. Ditto scan/shred.

On opening a new bank account you'll also be asked to produce a passport or photo driving licence too, which of course are in document form in any event.

Oh, and never destroy your P60s, even if you scan the originals.
posted by essexjan at 5:02 AM on April 9, 2008


Thanks guys, this subject is getting clearer and clearer, and I'm very grateful for the input!

I don't want to eliminate paper altogether, nor can I, but it looks like there is an acceptable rule-of-thumb for retaining documents - that list was just what I needed essexjan!

I'm planning on keeping everything encrypted and stored safely offline - I don't want a potential loophole through allowing online access to my documents. I haven't looked at products like Truecrypt yet, because all my current scanned in stuff is just my own personal creative notes and musings - wouldn't want them on a website somewhere, but if they did get compromised it's not the end of the world.

I think that has answered everything I needed to know and more, thanks for all the information!
posted by Scramblejam at 6:38 AM on April 9, 2008


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