Her Majesty's Revenue and Customs (HMRC) require you retain your company or organisation's business and accounting records for at least six years from the end of your current Corporation Tax accounting period. For example, if your accounting period ends on 31 March 2012 you'll need to keep the records for that period until at least 31 March 2018.
You don't now need necessarily to keep most of your records in their original form. If you prefer, you can keep a copy of most of them in an alternative format - for example as a scanned PDF or saved as files on a CD-ROM or an optical imaging system. Whatever alternative format you choose, your records must be legible and you must be able to produce them in a readable format if you need to.
There are, however, certain records that you must keep in their original form, including dividend vouchers, bank interest certificates and Construction Industry Scheme (CIS) vouchers, which were used before April 2007. Since 1 April 2009, HMRC has been able to specify in writing that records may be kept for a shorter period, but this permission must be sought and agreed, before any records are at risk of being discarded too early. By law, VAT records have to be kept for six years unless HM Revenue & Customs allows a shorter period. Any request you make to keep records for a shorter period must be accompanied by a full explanation of why it is considered impractical to keep the records.
If you receive a Government grant, the documents relating to any such grant must generally be kept for four years from receipt of the grant. Where grant aid is still being received, no documents should be destroyed without consulting the relevant Government department. The recommendation from HMRC about keeping pay records is that they should be kept for three years, after the income tax year to which they relate. For periods before the start of self assessment, HM Revenue & Customs can issue an assessment at any time up to six years after the end of the chargeable period to which the assessment relates. There is no limit in cases of fraud or wilful default.
A previous requirement to keep Employers' Liability policy certificates for 40 years has been replaced by guidance, where businesses are reminded that their potential liability for illness and injury at work does not end when the policy expires. Records should be retained to ensure that any future claim can be met. Outside HMRC requirements, the 1980 Limitation Act allows an action to be brought on a contract for up to six years from the event - the breach of contract - which gave rise to the claim. Where a contract is under seal (or deed), the time limit is twelve years. Thus these periods govern how long invoices and other documents should be retained as evidence in case of a claim by, or against, you or another party.
Sources: www.hmrc.gov.uk