MTD Record Keeping Requirements: What HMRC Expects

MTD changes how you keep records, not just how you report them. HMRC requires specific information to be held digitally, maintained throughout the year, and kept for a minimum period. Here is exactly what they expect.

What Must Be Recorded Digitally

For each business transaction, you must record:

• Date of the transaction
• Amount (in pounds and pence)
• Category (the type of income or expense)

For your business:

• Business name and address
• Your name and National Insurance number
• The start and end dates of your accounting period

Income Records

Every item of business income must be recorded with:

• The date you received payment (cash basis) or earned the income (accruals basis)
• The amount
• The source (which customer or income stream)

Expense Records

Every business expense must be recorded with:

• The date you paid (cash basis) or incurred the cost (accruals basis)
• The amount
• The category (travel, office supplies, professional fees, etc.)
• The supplier or merchant

Supporting Evidence

While the transaction data must be digital, supporting evidence (receipts, invoices, contracts) can be kept in any format — digital or paper. However, digital storage is strongly recommended because:

• Paper receipts fade and can be lost
• Digital copies are easier to search and retrieve
• If HMRC asks for evidence, you can provide it immediately

How Long to Keep Records

Records must be kept for at least 5 years after the 31 January submission deadline for the tax year they relate to.

| Tax year | Final declaration deadline | Records kept until | |----------|--------------------------|-------------------| | 2026/27 | 31 January 2028 | 31 January 2033 | | 2027/28 | 31 January 2029 | 31 January 2034 |

If HMRC opens an enquiry into your tax affairs, you must keep records until the enquiry is complete, even if this is beyond the normal retention period.

Digital Links

If you use more than one piece of software or spreadsheet in your record keeping, data must flow between them digitally — no manual copying. This includes:

• Formulas linking spreadsheets
• API connections between software tools
• Automated imports and exports

Penalties for Poor Record Keeping

HMRC can impose penalties for failure to maintain adequate records. In practice, enforcement is likely to focus on persistent or deliberate failures rather than honest mistakes in the early years.

Practical Tips

• Use cloud-based software like Accounted for automatic backup and long-term storage
• Photograph receipts as you receive them
• Review and categorise transactions weekly
• Do not delete old records — even if you change software, keep archived data accessible

MTD is coming. Accounted is already compliant. Start free and be ready before the deadline.