The basic legalities of scanned documents

Does a scanned document stand up in court?

In comparison to paper documents, the issues for electronic documents actually seem to rest on how much integrity they have in terms of ‘pedigree’ and authenticity rather than their admissibility. Courts and governing bodies now accept that electronic filing is normal procedure for many companies, and they fully accept electronic documents as evidence or supporting material so long as companies can prove that they’ve taken the appropriate measures to ensure their integrity.

The Basis in Law

The Civil Evidence Act 1995 is perhaps the most relevant point of law to address in relation to electronic documents. Its legacy is to take the onus off the question of physical admissibility, instead examining the actual weight carried by the electronic evidence submitted. The evidential value is then determined by the procedures followed by the company presenting the documents. To put is simply, if a company submits a document that has clearly been unaltered since its creation or which brings with it a clear audit trail that categorises any changes made to it along the way, then that holds for more evidential value than a document that could possibly have been amended in the interim. Simple procedures ensure document integrity for a company looking to move towards an electronic filing system.

Sections 8 and 9 of the Civil Evidence Act 1995 illustrate the legal guidelines for electronic documents as evidence:

8 (1) Where a statement contained in a document is admissible as evidence in civil proceedings, it may be proved;

(a) by the production of that document, or

(b) whether or not that document is still in existence, by the production of a copy of that document or of the material part of it, authenticated is such a manner as the court may approve.

(2) It is immaterial for this purpose how many removes there are between a copy and an original.

9 (1) A document that is shown to form a part of the records of a business or a public authority may be received in evidence in civil proceedings without an further proof

(2) A document should be taken to form part of the records of a business or public authority if there is produced to a court a certificate to that effect signed either by an officer of the business or authority to which the records belong.

Essentially, this law may be interpreted to show that an original document is not the only admissible evidence in civil courts. Electronic copies of documents are acceptable so long as their integrity can be proved. Criminal courts involve a more complex set of guidelines, and business with concerns about compliance in this area should check with a specialist lawyer.

Scanned documents and HM Customs & Excise

 What about the VAT

At present, the law makes no distinction between electronic or paper records. As a result, Customs & Excise simply refer to ‘records’ in their guidelines – whether a business keeps their records on paper or electronically makes little difference.

They do, however, insist that you inform them of the format you use for your records.

Section 5.4 of VAT Notice 700/21 reads as follows:

If you keep all or part of your records and accounts on a computer, you must make sure that you can meet your legal obligations to:

  • Account for VAT properly
  • Provide information to us whenever we visit you; and
  • Keep records in the required detail for the required length of time

In practical terms, a business should therefore advise their local VAT office that they wish to store scanned documents copies of all their records in ‘format X’ (either TIF or PDF format), and that those records will be held within ‘document management system

Customs & Excise do not recommend any particular software packages of file formats and at present an acceptable standard has not been precisely defined, but ‘may be taken to mean that all details on the reproduced documents are clear and legible’, which enables fairly broad interpretation.

By also following the Code of the British Standard BSI DISC PD0008 in addition to the requirements of Customs & Excise, a company can take the best precautions available to ensure that their records are acceptable for a VAT inspection.

Timescales for Record Keeping

The general requirement for record keeping is a period dating back at least 6 years. For many companies, keeping paper records for so long is fraught with difficulties. By agreement with the Commissioners, this time limit requirement may have a degree of flexibility. It could be noted, though, that if a company uses electronic filing, then the 6 year timescale is of little consequence.

One important consideration for Customs & Excise is their requirement that any original paper invoices must be retained for a period of no less than one VAT period. This would ensure that the current VAT return can be verified using original documentation. Depending on the nature of the company’s accounting pattern, this period is either 1 month, 3 months or 1 year in length.

After this time and submission of the return in question, the company can then consign those accounting records to electronic filing in confidence.

Scanned documents and the Inland Revenue

Not a world away from the requirements of Customs and Excise, the Inland Revenue has adopted a fairly flexible view of records stored electronically, based on the same grounds that the law does not at present differentiate between paper and electronic documents.

Set out in Tax Bulletin 37, the Revenue provides the following guidelines:

Records may be preserved on optical imaging systems, and the originals discarded, provided that what is retained in digital form represents a complete and unaltered image of the underlying paper document. We are now able to go further: Both in the case of companies and unincorporated businesses we can accept other methods which preserve the information in the record in a different form. This is so long as those methods capture all the information needed to demonstrate that a complete and correct tax return has been made and are capable of yielding up that information in a legible form.

They go on to confirm that some material, such as a company’s standard terms and conditions of sale, is not required to be retained for tax purposes. However, exactly what material should be retained and what can be discarded should be checked thoroughly with a tax adviser as regulations differ across industries.

In this Tax Bulletin, the Inland Revenue also makes the important acknowledgement that companies complying with the British Standard BSI DISC PD0008 will automatically satisfy the tax requirements for keeping electronic records.

At present, under the terms of the Companies Act, for most companies the timescales that the Revenue requires material to be retained is set at 6 years from the end of an accounting period. In cases of investigation or late return submission, then this period will extend accordingly. Once again, electronic records management is by for the easiest method of storage for convenience and space-saving benefits.

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About martin smith

A degree in Engineering Management ,who is just trying to make life a bit easier, for anyone who wishes to read these articles. View all posts by martin smith

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