Books and papers are also known as "accounting records" and are the trading records relating to the insolvent's affairs. The trading records usually consist of books of account, invoices, bank statements, petty cash vouchers and wage records but can also include contracts, business correspondence and other documents that are not accounting records but may be necessary for the official receiver's duties of investigation and asset protection. Some of these records may be computerised and special attention should be paid to these. (See paragraph 15)
The books and papers are required by the official receiver in order to carry out his/her duty to investigate the insolvent’s affairs and to protect and where appropriate, to realise assets.
It will be for the examiner to decide whether or not the books and papers should be recovered. If a decision is taken not to collect the books and papers, the examiner should record the decision together with the reason for it on the appropriate part of the CAR form.
In debtor's petition cases the examiner will carry out a review of the statement of affairs and decide how to approach the case. The case will be classified into type 0, type 1 or type 2 and, where appropriate, appointment letters will be sent detailing how accounting records of the bankrupt are to be dealt with.
When telephone contact is made with a director, partner or bankrupt (in a creditors' petition case), he/she should be asked about the whereabouts of any books and papers and instructed to bring them to the first interview. If this is impractical due to the volume of records or for some other valid reason, arrangements should be made for their collection.
The official receiver is entitled to possession of the books and papers if they are required to carry out his/her investigative, or any other function. The bankrupt, partner or director has a statutory duty to surrender the books and papers to the official receiver. Where the books and papers are held by a third party, they should, if considered necessary, be obtained prior to the first interview. If the third party attempts to claim a lien over the records (a lien is a legal right to retain the records until a claim has been met) which means that they refuse to surrender them to the official receiver, the lien is unlikely to be enforceable but refer the matter directly to the examiner for advice.
A schedule of records handed over (form SHRO) is incorporated in both bankruptcy and company preliminary information questionnaires (PIQDP, PIQB & PIQC) and should be completed by the appropriate bankrupt or company officer when the books and papers are handed in.
Generally, the books and papers will be brought in for the interview with an examiner although there will be cases where they will arrive separately, for instance, prior to or following a telephone interview in a debtor’s petition case, where they have been held by a third party, or where they have been held in storage.
Occasionally, the books and papers may be left in storage where, for example, an administrative receiver has placed them in storage and passed the storage contract to the official receiver on the winding up of the company. The administrative receiver should then be asked to provide the official receiver with a schedule of the books and papers for the office case file.
Whenever books and papers are brought into the office, form BPRCT, LOIS (DO73) ‘Books and papers receipt’ must be completed at that time. The original will be handed to the person delivering the books and papers once they have signed the form to verify its contents, and the official receiver will retain a copy.
In cases where the books and papers are delivered by post, courier or DX, a receipt on form BPRCT should be sent by return of post. If the books and papers are collected by the official receiver’s agents, they should issue a form of receipt and it is for the official receiver to ensure that the agents have a stock of suitable forms for this purpose. It is not possible for a third party to deliver the books and papers direct to the official receiver’s storage contractors.
Where the individual delivering the books and papers has a connection with the case, he or she must be asked to complete form SHRO (Schedule of records handed over) but obviously this may not be possible in every case. If the person who delivers the books and papers refuses to complete form SHRO, the fact should be noted on the file together with details of the books and papers delivered up.
The receipt form BPRCT need not contain a detailed analysis of the books and papers being surrendered, the number of boxes or other containers, books or envelopes etc. will suffice. When the list is complete the books, envelopes and other items should be numbered in sequence. This is designed to ease identification later. It may mean that where, for example, there is a bag of books and a number of loose books, the bag is listed as number one because the bag is full and the separate books as numbers 2, 3, and so on.
There will be cases where all of the books and papers are not delivered together. If the books and papers are delivered in stages a separate receipt form BPRCT must be completed on each occasion. The numbering of items will then continue consecutively so that each new sheet will commence with the next number.
Once the books and papers have arrived at the office, and the items numbered, the case officer should be notified as quickly as possible. If the examiner receives the books and papers during the interview, he/she must notify the case officer as soon as the interview has finished. Where books and papers are delivered to reception separately, the reception staff are expected to notify the case officer within 1 hour.
Where the delivery of the books and papers was by arrangement with an examiner for a specific day, the examiner should be available to deal with the records.
Once notified that the books and papers have arrived, they must be registered as soon as possible and numbered for subsequent ease of identification. The BPRCT should be copied and the items thereon identified by a number. The relevant number must then be written or stamped on the item in question.
When the books and papers have been numbered, they should then be registered on LOIS (CA27), by no later than the end of the next working day after receipt, using the numbers allocated to them on the form SHRO.
If no receipt form BPRCT has been completed, check with the examiner that the books and papers have not been listed separately on form PREADD, LOIS (DO73) ‘Prelim – Additional Questions’ instead. If this is the case, treat that list in the same way as the SHRO for registering the books and papers. If not, the books and papers should be stored pending the CAR decision. In cases where there is a ‘no further investigation’ decision, form SHRO will not be completed. Where there is no SHRO, the books and papers must still be registered on LOIS (CA27).
Where the volume of books and papers is particularly high, it is not recommended that the items be individually stamped or labelled as is generally done. Instead, they may be grouped together by age, not by type e.g. "sales day book, sales invoices, cash book …. for 2005". If professionally prepared accounts exist and the books and papers relating to those accounts have been bundled together by the auditors, they should be left like that and the auditor’s descriptions used for recording them. An alternative method would be for the official receiver to make a floor plan whilst attending at the business premises, showing the location and labelling of filing cabinets etc. where accounting records are stored. They can then be boxed and scheduled according to where they were kept.
In the majority of cases, once the examiner has looked at the books and papers they can be boxed and stored, either on site (local official receiver’s office) or by the Service’s external storage contractors. In those offices where the official receiver retains the books and papers on site, their location should be recorded on LOIS (CA27), in as much detail as possible and a copy of form SHRO placed in the first of the boxes to assist subsequent identification.
No entries should be made in or on any of the books and papers by Official Receiver’s staff and no books should be ruled off.
In February 2001, a single national contractor Graphic Data Online (formerly Sala International Limited and hereafter referred to as Graphic Data) was appointed to provide an external storage management system for The Insolvency Service (The Service). Graphic Data uses an electronic records management system enabling official receivers to track the location of any box entered into its system. A standardised bar coded system is used to ensure accurate record management. An internet link is used to record boxes sent to store, to order services from Graphic Data and for general record management. The website is accessed via www.graphicdataonline.com and access to the site is by password.
The Graphic Data Head of Customer Services will deal with any queries raised by Insolvency Service staff. Any problems with service that arise at local office level should in the first instance be directed to him/her. The Head of Customer Services can be contacted at 2 Campfield Road, Shoeburyness, Essex, SS3 9BX, via e-mail at email@example.com, by telephone on 01702 299888 or by fax on 01702 297007.
Charges under the contract are fixed for 4 years and the Service is invoiced on a monthly basis showing the number of boxes being stored, box collections, destructions and transport costs, etc. Each local official receivers office is sent, from Official Receiver Operations (OROS), details of their storage and other relevant costs for checking. The Service has a contract manager who holds regular formal meetings with the contractor. Each official receiver’s office using Graphic Data’s services has a nominated single contact who will sign an authority form for Data Protection Act purposes.
There are still some offices that have the facilities to retain books and papers on site and the contract has not altered the practice in those offices, but it is for each official receiver to determine the most efficient balance of onsite/offsite storage for their office.
Graphic Data will collect boxes from the official receiver on a scheduled day, if notified two working days prior to the collection date. The official receiver should contact Graphic Data via the internet to confirm the number of boxes to be collected. A trigger point relating to the number of boxes is required for the scheduled visit to occur, otherwise Graphic Data will automatically cancel the visit and the boxes will be collected at the next scheduled visit. It is up to official receivers to increase or decrease the trigger point to suit the needs of the office and where any such changes are made the contract manager in OROS should be informed accordingly. Until such time as the boxes have been removed by Graphic Data, there is no cost to the official receiver.
All boxes to be sent to external storage must be bar coded with the bar codes provided by Graphic Data. Each bar code number is entered on LOIS (CA27) and Graphic Data’s record management system, which is accessed via their website. When the Graphic Data courier arrives to collect the boxes, a check will be made to ensure that the number of boxes tally and the official receiver may receive a "collection confirmation note" confirming the number of boxes collected. The official receiver should maintain a record or spreadsheet, listing those items that have been collected or are due to be removed, so that this can be checked against the invoice for storage costs, once received.
Where an IP is appointed trustee or liquidator, the official receiver must ensure that only the insolvent’s books and papers are handed to the IP and not records belonging to a third party. For example, in the case of a bankrupt solicitor or accountant, where papers belong to the clients, they should be returned to them. In the case of a doctor, any patients records found in the papers should be forwarded to the Chief Executive of the local Primary Care Trust who will pass them to the patient’s new doctor. (For more information see Technical Manual chapter 59 paragraph 59.68).
The detailed schedule of the books and papers on LOIS (CA27), must be printed off and a copy signed by or on behalf of the insolvency practitioner. It should also be made clear when the books and papers are handed over, that the official receiver may require access to them, or their return if necessary, for investigation purposes. Where a case is subject to an ongoing investigation, the official receiver can retain the books and papers and allow the insolvency practitioner access to them where necessary.
Where the books and papers are held in external storage, the IP should be informed of this immediately on appointment as the official receiver should make every effort to ensure that storage costs are not incurred after the date the IP was appointed.
Where the instruction "preserve all books and papers for the time being" has been given, each office must have a system for ensuring that these books and papers can be inspected until they are no longer needed and that they are not kept in storage any longer than is necessary.
The official receiver must always bear in mind that although the books and papers are no longer required by him/her, there may be other reasons why they should be retained.
In all ‘investigation register’ cases the official receiver must not destroy, or consent to the destruction of any accounting or other books and papers until all prosecution, disqualification or bankruptcy restriction proceedings have been disposed of. This includes appeals, or until such time as the case has been written off for further investigation purposes. It is essential that case books and papers are marked with this inhibition and that external storage contractors are notified specifically that they are to be retained until further notice. For further information see Technical Manual, paragraph 10.33.
VAT regulations require trading records to be kept for 6 years but special arrangements have been agreed with HM Revenue and Customs. Where books and papers are less than 6 years old but more than a year has elapsed since the bankruptcy or winding-up order was made, they may be destroyed without reference to HM Revenue and Customs.
Where the insolvent is registered for VAT and destruction of books and papers is appropriate in a case that is less than one year old, form BPOGD, ‘Books & Papers, notice to other government departments’ (OGD’s) should be sent to the National Insolvency Unit (NIU), HM Revenue and Customs, 5th Floor, Regian House, James Street, Liverpool, L75 1AD. The notification should inform HMRC that they have three months to respond otherwise the records will be destroyed. The second page of this form shows several options and should be completed and returned by HM Revenue and Customs if they require the records to be kept. The official receiver's records should then be noted with their decision and the books and papers dealt with accordingly, either preserved or destroyed. The completed BPOGD should then be placed on the office file. If no response to this notice is received within the three month period given, the official receiver has authority to destroy the books and papers.
Tax regulations generally require books and papers to be kept for 22 months after the last self assessment form has been completed by the tax payer (unless a trader or involved in letting property when the period is 5 years 10 months). Special arrangements have been made with HM Revenue and Customs in bankruptcy cases so that the trustee is not required to keep the records.
In all cases, before destroying the books and papers the official receiver must write to the local tax office using form BPOGD to confirm whether they need to inspect the books and papers. The form contains a tear off sheet for HM Customs and Revenue to complete, indicating whether they wish the books and papers to be retained for inspection. The returned form should be placed on the office file and the books and papers dealt with accordingly, i.e. either preserved or destroyed.
If the form is not returned within three months, then the books and papers may be destroyed without further reference to HM Revenue and Customs. HMRC only need to respond if they require the records to be kept.
Documents produced on machines such as facsimile (fax) machines use thermal paper and this can be identified by the waxy feel of the paper and a slightly blurred image. These copies can fade within months, and prolonged exposure to light can cause damage. Any documents which have been produced in this way and need to be kept for more than a couple of months must be photocopied as soon as possible after receipt. Both the thermal print and the photocopy should be placed on file.
15. Financial Data Recovery (FDR) from Computers, equipment and other electronic media
The work involved in ‘financial data recovery’ (FDR) from computers and other forms of electronic media that come into the possession of the official receiver, is now undertaken by the Forensic Computing Unit (FCU). The FCU is part of the Companies Investigation Branch (CIB), but is also used by official receiver offices to undertake FDR work. In carrying out this work the FCU produce forensically sound copies of electronic data received or taken from companies and individuals and present the findings in a variety of ways, in order to assist investigations.
The unit works to the Association of Chief Police Officers (ACPO) committee, concerned with ‘guidelines on digital evidence’ which are a standard used and understood in British courts.
There are four documents for use in requesting assistance from the FCU, for example, in the imaging of electronic accounting records, and all of the documents have been revised to ensure ease of use and are available on the intranet. The documents provide instructions on the preliminary handling of computers, equipment or electronic media, as well as information, guidance and procedures on;
The FCU can be contacted by e-mail – firstname.lastname@example.org or by telephone on 020 7596 6126 or by fax on 020 7596 6107. Their offices are on the Ground Floor (BL Ground), 21 Bloomsbury Street, London, WC1B 3QW.
Discs and tapes cannot be stored away in boxes with the books and papers. These have a limited life span before the data stored on them becomes corrupted and therefore impossible to read. If a disc or tape is exposed to any of the following conditions it will be seriously damaged and will be useless;
a. magnetic source
b. writing on a soft sleeve of a disc (usually the 5 1/4 discs). If you must write on these ensure that a felt tipped pen is used and not a ballpoint pen.
c. touching the exposed area of a disc itself
d. heat, cold, dirt or damp
e. flexing, bending or crushing a disc
f. storage of a 5 1/4 floppy disc outside the card envelope supplied with it
Books and papers must not be destroyed if;
a. HM Revenue and Customs request that they are retained
b. a government department has asked to inspect them but have not yet done so
c. they are required in connection with civil, disqualification or prosecution proceedings
d. they might be required for a possible public examination
e. there is a possibility of a rescission, annulment or stay of proceedings
After an annulment the books and papers should be returned to the former bankrupt (unless the annulment is several years after the bankruptcy order, in which case they will probably already have been destroyed.) Where, in a winding up a stay is ordered, books and papers should be disposed of as directed by the court but if no such direction is given, they should be returned to the company.
f. there are other matters that might delay the destruction of books and papers such as asset realisation, pension schemes and even historical interest
g. no records should be destroyed without the examiner having fully considered these and other implications
h. books and papers that must be retained for whatever reason must be marked clearly and boldly with "NOT TO BE DESTROYED"
Where an employer is subject to a winding-up or bankruptcy order the official receiver should retain any 'employers liability insurance certificates' for the required forty years. To fascilitate the storage and retention of these certificates, the official receiver should extract the certificates from the books and papers and file them separately in files maintained for that purpose.
Full details of the process to be followed are contained in the Employers Liability Insurance Certificates Registration Process Guidance produced by the Records Management Team, to ensure best practice and consistency across The Service.
A comprehensive file destruction policy for Enforcement and Investigation Directorates is specified in the Enforcement Investigation Guide Chapter 118. The destruction policy also relates to investigations into insolvency practitioner cases carried out by official receivers. See the Technical Manual Chapter 10 Part 9 for case related destruction guidance on non-investigation cases.
A destruction review date must be given to Graphic Data in all cases where boxes are sent to external store and that date must also be recorded on LOIS (CA27). Each month the official receiver will receive a report listing those boxes, including the case names, which are eligible for destruction once the review date is due. The official receiver then returns the report to Graphic Data annotated with details of whether or not the box can be destroyed. If the books and papers identified for possible destruction are not to be destroyed for whatever reason, the destruction review date must be updated on LOIS and the new date forwarded to Graphic Data.
The records of books and papers held on site by the official receiver must be checked regularly to ensure that any books and papers that are due for destruction are not overlooked. This is particularly relevant where the date given for destruction is some months ahead. This type of waste cannot be placed with ordinary refuse as it contains confidential information and must be disposed of only by way of confidential waste sacks, shredding or incineration. Once authority to destroy books and papers has been given, destruction should take place as soon as possible to prevent unnecessary and costly storage.
Where the official receiver has authorised the destruction of books and papers held by Graphic Data, they will destroy them by pulping within 14 days of receiving authority. Any storage charge should cease within 7 days of the official receiver confirming the records can be destroyed.
Form BPOGD must still be sent to HM Revenue and Customs and the books and papers preserved until either three months have elapsed with no response, or the tax authority have indicated that they are not required.
a. Where an IP holds records and asks for authority to destroy the books and papers, form BPDC, LOIS (DO73) should be sent to him/her for completion and return.
b. His/her request and the completed form BPDC should be passed to the examiner. If authority to destroy is given then form BPIPD, LOIS (DO73) ‘Books & Papers, IP disposal’, should be signed by the examiner and forwarded to the IP.
c. Where the official receiver does not need the books and papers to be returned by an IP he may authorise the IP to destroy them, again by sending form BPIPD.
d. Requests for information in investigation cases should be made to HM Revenue and Customs, Enforcement and Insolvency Service, Durrington Bridge House, Worthing, BN12 4SE, but should be sent by email to email@example.com.
e. Where HM Revenue and Customs request that large quantities of books and papers be retained they should be invited to make an early inspection. It may be that on inspection it will be found that much of the material can be destroyed.
f. Books and papers held by a commercial storer may have to be inspected by an investigation officer or solicitor for prosecution or disqualification purposes. In such cases, a letter of authority to inspect, form IOAUTH, LOIS (DO73) ‘Investigation, IO Authority’ should be sent to the Investigation Officer or solicitor. An amended form IOAUTH, authority to release the books and papers to the investigation officer or solicitor, should be forwarded to the storer.
Where can I find out more?
Insolvency Act 1986
Section 191 – Company’s books to be evidence
Taxes Management Act 1970, as amended by the Finance Act 1994
Case Help Manual
Enforcement Investigation Guide:
EIG Chapter 118
Forms to be used:
SHRO – A form on which the bankrupt, director or partner is to list the books and papers handed over to the official receiver
BPOGD – A form informing HM Revenue and Customs of intention to dispose of books and papers and giving opportunity to postpone destruction
BPDC – A checklist before destroying books and papers
BPIPD – Reply to IP requesting permission to dispose of books and papers
BPRCT – Receipt for books and papers handed to the official receiver
BPREM – Reminder to surrender books and papers to the official receiver, and the consequences of failure to do so
IOAUTH – A letter; for use where an Investigation Officer has been appointed to carry out an investigation giving authority to disclosure of information or access to books and papers
1 Receive books and papers.
2 Locate and copy the schedule of books and papers handed over form SHRO. Check with examiner if it is not included with books and papers. Ensure that a receipt has been issued on form BPRCT. Number each item as listed in form SHRO.
Depending on whether the books and papers are to be retained onsite or stored with Graphic Data, follow the procedure outlined in Part 1 or Part 2.
PART 1: WHERE RECORDS ARE TO BE RETAINED ON SITE
1 Label each box with:
a. name of case
b. court and number
c. appropriate number from form SHRO (e.g. this box contains items 1-10)
d. initials of case officer
e. place copy of form SHRO in first box
Where records relate to an investigation matter, the boxes should also be labelled "NOT TO BE DESTROYED".
2 Enter details of each box and its contents on to LOIS (CA27).
3 Record the storage location of the box onto LOIS (CA27).
4 Ensure that the boxes are removed to the correct location.
5 Where books and papers are to be retained for the official receiver’s purposes, record box destruction details, where known, onto LOIS (CA27) and include the date after which they are no longer required by the official receiver.
6 The record of books and papers must be regularly checked to see which records can be destroyed. The examiner should be approached for a review date, which should be entered onto LOIS (CA27).
7 If books and papers are no longer required by the official receiver and less than 1 year has elapsed since the insolvency order then, if the insolvent was registered for VAT, print and send form BPOGD to National Insolvency Unit (NIU), HM Revenue & Customs, Debt Management and Banking, 5th Floor, Regian House, James Street, Liverpool, L75 1AD.
9 If HM Revenue and Customs indicate that they wish to have the records retained for VAT inspection, follow the procedure for inspection of books and papers, see Case Help Manual Part Books and Papers – ‘Requests for Information’
10 Ensure that there are no investigation or disqualification matters outstanding.
11 A periodic check is necessary where an examiner could not originally give an exact date for destruction, or where HM Revenue and Customs have requested that the books and papers be retained.
12 Where the books and papers are retained at the request of HM Revenue and Customs, a date should be provided by the relevant authority for inspection or removal of them. Where none has been given they should be contacted again and a date requested. Enter the appropriate destruction date on LOIS (CA27).
13 Before any destruction takes place check that you have written authority to do so and only destroy those books and papers for which permission has been given. You may have permission to destroy only some of those held for a particular case.
14 Where books and papers were retained pending an investigation or criminal allegation matter, check with the examiner to confirm that the case has been concluded and the books and papers may be destroyed. Do not destroy until confirmation has been received from the examiner.
15 Find out where the books and papers are stored and remove them from storage (CA27).
16 Remove books and papers from their box and arrange for them to be shredded.
17 Enter details of the books and papers destroyed onto LOIS (CA27).
PART 2: BOOKS AND PAPERS TO BE STORED WITH GRAPHIC DATA
1 Where there is one or more boxes of books and papers from a single case, the following information is required by the Graphic Data record management system (RMS) which can be accessed via an Internet link at their website:
a. bar code of box number
b. box description, e.g. accounting records
c. destruction review date
d. case name
e. court reference
f. bankruptcy order/winding-up order
g. box number ….. of ……
The collection of this data is known as ‘box level capture’ and the "capture box" button should be pressed after the details are entered.
2 If books and papers collected for a single case are insufficient to fill a bar-coded "B" type box, use books and papers from other cases to ensure that the box space is not wasted. Where this occurs, separate the books and papers into a bar coded "F" type envelope labelled with the case name, court reference and destruction review date.
3 Ensure that the envelopes contained in each box have destruction review dates that are no more than 6 months apart.
4 Mark the outside of the box clearly with the latest destruction review date of the envelopes contained within and labelled "BOOKS AND PAPERS".
5 The following information will need to be input into the Graphic Data RMS via the internet link:
a. bar code number. of box
b. box type – books and papers
c. destruction review date of box
This is "Box Level Capture".
6 The details of the books and papers contained within the box must also be entered onto the Graphic Data RMS as follows:
a. bar code number of envelope containing records
b. case name
c. court reference
d. bankruptcy order/winding-up order
This is "Record level capture".
7 Details of the books and papers for each case must also be recorded on LOIS (CA27).
Destruction Process by Graphic Data
8 When the monthly report from Graphic Data is received listing the boxes with case names eligible for destruction once their destruction review date becomes due, consider whether any of the books and papers need to be retained.
9 The report should be annotated with details of whether or not the box can be destroyed and must be signed by the authorised signatory within each office before returning to Graphic Data.
10 If any books and papers are not to be destroyed, input new destruction review dates onto LOIS (CA27) and forward to Graphic Data.
11 Before authorising destruction the OR may, if the circumstances are appropriate (see Procedure Part 1 steps 7 and 8) send form BPOGD to HMRC and/or the local tax office. Act on any reply, or if no reply is received within 3 months, the records may then be destroyed. See Introduction xiii ‘Retention of records’ for more information.
12 Where the official receiver has authorised destruction, Graphic Data will destroy the books and papers within 14 days of receipt of the authorisation. Details of destructions carried out are given on the monthly invoices.