At the end of January every year the UK goes into tax return meltdown and by the stroke of midnight on the 31 January deadline, more than nine million individual tax returns will have been filed for the year. If you’re a high rate UK resident taxpayer or company director, you must file a Self Assessment tax return every year and many people, me included, opt to enlist the services of an accountant to do this.
While we Brits might like to arrange ourselves in orderly queues for many things, filing tax returns isn’t one of them. The ingredients of bad record keeping and procrastination combine right around this time every January to form the practice efficiency equivalent of a dirty bomb in pretty much every accounting firm in the UK.
Meanwhile, being skint and also being conveniently in possession of crown appointed tax raising powers, the UK government’s revenue department, Her Majesty’s Revenue and Customs (HMRC), recently toughened the penalties it levies for late or incorrect filing and stands to further boost its inflow of taxes with cash derived from late filing penalties.
All of which makes January every year quite angsty if you’re an accountant in the UK.
While Xero doesn’t yet calculate or file personal tax returns, I decided to conduct an informal survey last week with a handful of Xero Gold Partners to enquire if their Xero clients’ tax returns were any less onerous owing to the data being online and bank feeds mitigating the chance for financial records to get out of step.
Here’s what they told me…
Laurence Moore, Prime Chartered Accountants
“…the challenge is getting the information from clients in time. Many tax return clients are directors and in many cases their only income is that generated by the business – salary and dividends. So, getting the information means getting their company accounts completed which relies on them giving us their accounting records. What we found this year is that as more and more clients are moving over to Xero, this information is available whenever we log in rather than waiting for the client to send it to us. We were therefore able to process Xero clients’ tax returns earlier in the cycle thus spreading the load on our tax department more evenly over the year as well as giving those clients more warning of their upcoming tax payments.”
Stephen Paul, Valued Accountancy Services
“…much easier, and in fact it has helped me to convert troublesome clients into clients that provide much better information more quickly through Xero.”
Peter Czapp, The Wow Company
“It’s easier with Xero. We’re able to log in and gather their dividend and salary information quickly and easily, allowing us more time to plot and scheme ways to help save them tax. This is good news for the client (and for us too).”
Jon Morley, JW Smith & Co, RM Locking & Co
“A key advantage is that where client is on Xero we have potential to get on with their work as soon as the year end bank reconciliation has been done so that eases pressure as the deadline approaches. Also having clients on Xero can reduce the time that we spend on their processing as, generally, the bank is reconciled and reasonably well analysed into the nominal.”
The four Xero Gold Partners quoted above between them handle the financial affairs of approximately six hundred Xero clients in the UK.