Running a business: Computer tax audit
The terms "record" and "document" include electronically stored information.
Keeping records on computer
Your business records:
- must be sufficient for legal purposes
- must be in English (unless we've approved another language)
- can be kept in any form, as long as they contain the necessary information
- must be kept for at least seven years, whether on paper or electronic media.
We encourage you to record and store your data electronically (disk, tape or other electronic media) as this lets us carry out the more efficient computer-assisted audits.
What records to keep
In addition to your business records you must also keep the following records for computer-assisted audits:
- Accounting or transaction level records, including the general ledger and other journals and subsidiary account books, in electronic format.
- Charts and codes of accounts, accounting instruction manuals, and system and program documentation that describe your accounting system.
- Record layouts you hold of all retained files. When systems have been modified, keep both the old and new record layouts.
Maintenance of electronic storage
As electronic media deteriorate with time, you need to follow a regular maintenance programme. You must make sure that the relevant electronic data is retrievable and readable at all times and follow appropriate backup procedures.
Computer system upgrades and replacements
When you install or upgrade a computerised accounting system, ask yourself:
- Can the new system retrieve and read data from the old system?
- If not, should the data from the old system be converted so it can be retrieved and read by the new system?
- If it will be too expensive or not feasible to convert data, do you want a third party to maintain your data or would you prefer to print hard copies of the old data?
However you decide to tackle these issues, you are still responsible for producing data to verify your tax liability.
You can provide us with electronic data on CD Rom, DVD, floppy disk or some tapes.
We can also download from any of these to our own computers. Transfer by cable or by USB memory stick between personal computers is also an option.
The best format for your data
You can save data in any of the following formats:
- delimited (preferably tab or pipe delimited but comma delimited is also acceptable)
- MS Access
- print file
You should document how data is copied onto disk, cartridge or tape. We will also require a record layout, the record length and the block size, if supplied on tape. Send this with the data.
If you have any questions about CTA and how it will affect your business, please email your query to firstname.lastname@example.org
Date published: 26 Sep 2012