The guidance that should be followed when converting paper records to electronic format depends upon the type of records being scanned: for general business records which need to be retained for 6 years for VAT inspection purposes HMRC guidance should be followed. IFAs and investment companies requirements for record keeping are governed by the FSA, whilst the Law Society provides guidance for Law Firms. Extracts from these organisations web sites that are relevant for electronic document retention are included later in this article.
Whichever body provides guidance on electronic document storage there is an important British Standard (BIP 0008) which lays down the process steps and guidelines required when converting paper records to legally admissible electronic records.
BSI BIP 0008 is a code of practice that provides guidance to ensure, as far as possible, that electronic documents and scanned images will be accepted as evidence by the courts. The key to this guidance is that the process under which documents are managed is as important as the technology used – where a document is reproduced it should accurately reproduce the contents of the “original”.
The key principles behind BIP 0008 are:
1. Authenticity – Processes to be followed at system planning, implementation and the procedures by which the systems should be operated.
2. Storage and access procedures – Procedures including scanning, indexing, retrieval, system administration, archiving, off-site storage and training, to be followed
3. Demonstrability of adherence – A structured audit process that displays demonstrability of adherence.
To support the BIP 0008 principles during the document lifecycle (i.e. creation, storage and destruction), Filestar does the following:
• A scanned document is created and stored in the PDF format.
• A digital fingerprint of the document is stored within the Filestar database record for that document. This digital fingerprint can be subsequently used to compare the document against its record to ensure that it has not been tampered with outside of the system.
• A full audit trail captures all actions taken on the document – such as its initial creation (where it came from, the user that created it, the workstation ID that was used to create it). The audit trail also tracks any views and document version changes. The audit trail is linked to the document via its digital fingerprint.
• The document and database stores are not directly accessible by users – these are secured by the system’s operating system.
• Users are required to log into the Filestar system using authentication – their actions on documents are fully audited.
• To ensure timely document destruction, Filestar uses retention policies. When documents are deleted, the process is recorded in the audit trail.
The Law Society carries guidance with regard to legal admissibility of electronically stored documents in its publication: Guidance – ownership, storage and destruction of documents, which is available from the Law Society’s website.
The ‘FSA Handbook: Conduct of Business: Section 3.7: Records’ deals not only with guidance for the term of document retention but also with the form of the record. The Handbook states:
3.7.4 A record may be in any form, provided that it is readily accessible for inspection by the FSA.
3.7.5 A firm may arrange for records to be kept in such forms as it chooses, such as hard copy, disk or tape…….a record would be readily accessible if it were available for inspection within 48 hours of the request being made
HMRC states that records kept in an electronic format are generally required to be treated the same as hard copies
As long as your VAT records meet HMRC’s requirements, you can keep them in whatever format – paper and/or electronic – that you prefer. If you do keep all or part of your records on a computer or with a computer bureau, you must make sure that your records are easily accessible to you and to a VAT officer when they visit.
If you upgrade to a new computer system which is not compatible with your old system, you must make sure that the records held on your old system remain accessible for up to six years. If this is not possible, then you must make paper copies.
You can also keep your records on microfilm, or microfiche, provided that copies can be easily produced and that there are adequate facilities for allowing VAT officers to view them when required. You do not have to apply in advance to keep your records in this way, but HMRC may require you to keep them in a different format if records are not easily accessible.
Document Management – Scanning – Storage
Archiving – Destruction – Document Imaging