How long must I keep records after closing a company

How Long Must I Keep Records After Closing a Company in Hong Kong

Keep accounting records for seven years after closing a Hong Kong company, even after deregistration or liquidation. The Inland Revenue Department imposes this under the Inland Revenue Ordinance (Cap. 112) and the Companies Ordinance (Cap. 622) does the same. The seven-year period runs from the end of the financial year in which the transactions occurred, not from the date the company was dissolved.

Record Retention After Company Closure Hong Kong

The statutory requirement to retain records survives the company's dissolution. The Inland Revenue Department can raise tax queries or conduct an investigation for up to six years after the year of assessment, and for seven years in cases of negligence. If the company has been dissolved and the records are missing, the former directors may be personally liable for any tax that cannot be assessed. The Companies Registry also expects that records be preserved in case the company is restored to the register, which requires the company's financial position to be demonstrated.

How Long to Keep Company Records Hong Kong

The seven-year retention period applies to all accounting records. This includes books of account, invoices, receipts, vouchers, bank statements, contracts, correspondence, and any other documents that support the company's income and expenditure. Inland Revenue Department guidance states that records must be kept for at least seven years after the completion of the transactions to which they relate. For a company that closes, this means records from the final year of trading must be kept for seven years from the end of that year.

Company Records After Deregistration

Deregistration under section 750 of the Companies Ordinance does not extinguish the obligation to keep records. The company ceases to exist as a legal entity, but the directors and shareholders who held the records remain responsible for their preservation. If the company was liquidated, the liquidator will typically retain the records for the statutory period or arrange for their storage. In a members' voluntary liquidation, the liquidator must keep the records for seven years from the date of dissolution.

Seven Years Record Keeping Hong Kong

The seven-year rule is found in section 51C of the Inland Revenue Ordinance (Cap. 112), which requires every person carrying on a business to keep sufficient records for at least seven years. Section 373 of the Companies Ordinance (Cap. 622) also requires a company to keep accounting records for seven years. These two requirements run concurrently, so the same seven-year period satisfies both. Failure to keep records can result in a fine of up to HK$100,000 under the Inland Revenue Ordinance and a fine of up to HK$300,000 under the Companies Ordinance.

Final Audit and Final Return Requirements

Before closing a company, complete the final audited financial statements and the final profits tax return (Form BIR51). The audit must cover the period up to the date of cessation of business. File the final return with the Inland Revenue Department and obtain a notice of no objection from the Commissioner of Inland Revenue before applying for deregistration on Form NDR1. Cancel the Business Registration Certificate separately with the Inland Revenue Department. The records supporting the final audit and return must be kept for the full seven-year period.

Practical Steps After Closure

After the company is dissolved, store the records securely and note the date on which the seven-year period expires. As a director, keep the records yourself or arrange for a professional firm to hold them. If the company is restored to the register, the Companies Registry may require the original records to be produced. The restoration process can be complicated if records are missing, as the court or the Registrar will need evidence of the company's financial position at the time of dissolution. Keeping the full set of records for seven years avoids this risk.