Record keeping comes in various shapes and forms and pretty much everyone nowadays carries around with them an incredibly useful device for keeping records for tax purposes. The camera on the mobile phone.
The requirement to keep your business records safe for at least five years (and keep back-up copies away from the same device) should by now be well known and most landlords and traders generally accede to this rule. For some, however, the need to have records does not become apparent until something more infrequent happens – e.g.: the sale of a property.
In recent years, HMRC have become much more insistent on requesting proof in the greyer areas of taxation and for those not expecting questions from advisers or worse, HMRC themselves under an enquiry, trying to prove that something was used in a certain way, such an event happened, or the size and condition of something when it was purchased becomes increasingly harder as time goes on.
For example, a recent case queried when an extension to a property took place. Unfortunately, the records from the builder were undated and the timing of the extension affected the value of property for tax purposes at a given date. However, the taxpayer was able to provide photographs of the building work in progress. Although the photographs were undated, in those photographs the registration of a car could be seen (and thus proof that the photograph of the extension could not have been taken as early as HMRC had contended). This in turn enabled the taxpayer far greater tax relief than HMRC and the District Valuer had offered.
Photographs should naturally not be relied upon to the exclusion of proper business records (digital copies of receipts notwithstanding) but they can provide very useful circumstantial supporting evidence of when or how things occurred. Where residential properties have grounds in excess of 0.5 hectares (or just under 1¼ acres in old money) the ground size will not automatically qualify for main residence relief for CGT as it exceeds the permitted area. However, where this occurs, larger gardens and grounds can still qualify if they are of a size and character required for the reasonable enjoyment of the home. The phrase “Reasonable Enjoyment” in tax legislation is a subjective test and photographs can help prove your family’s enjoyment and use of the garden in question.
With increased digitalization, it is now, of course far easier to store photographs digitally but don’t forget the old copies gradually fading in the loft from the days of film. Maybe it is time to dig them out a scan them electronically and possibly relive a few memories at the same time.