The digital tax revolution has begun: what it means for accounting
Covid-19 has had a huge impact on working practices and business survival. Firms have had to quickly adapt. Cloud based tools like Microsoft Teams, Slack and Xero have been key in ensuring that work can continue from anywhere and anytime.
Not only did accountants have to quickly adjust to the challenges of remote working, but they also had to get up-to-speed with the latest government support packages. In the midst of the pandemic, the Government then laid out its future plans for MTD. One thing is certain; digital is here to stay.
Accounting firms that have been traditional at the core are now seeing how these cloud-based tools offer far greater scalability and resilience. And at Xero, we are on a mission to support accounting firms as they digitise and close the compliance gap.
In recent months it’s never been more important to have access to high-integrity data, both for profitability and long-term cash flow. This was why we launched Xero Tax earlier this year, one of the only cloud-based tax and accounts production solutions - to transform compliance.
Commenting on her experience of using Xero Tax, Cheryl Sharp, accountant and founder of Pink Pig Financials said the software was: “very quick and simple and takes a huge hassle away of re-entering / trying to import data. It's the best accounts production software I've used”.
There’s proof that it is saving time. After surveying a number of our accounting partners, 90% told us that using Xero Tax saved them a significant amount of time. A third of those partners also told us they save over an hour per client job.
Richard Howlett of CBA Services LTD commented: “It’s so great to have all the information in one place. Any changes are reflected throughout the entire system at the touch of a button. This shows how, by automating and streamlining the work, Xero Tax gives you real-time insights, and allows you to advise and plan better than ever before.”
There’s no doubt that it’s been a challenging time for many, with the pandemic changing how we live, work and operate. At the same time, Making Tax Digital continues to drive forward. The need for a more flexible and resilient tax system that provides up-to-date and accurate data has been brought to the fore.
Tax technology - and AI and automation - has been designed to make life a little simpler, more seamless and smarter for accountants and bookkeepers. We’ve only just scratched the surface, in terms of what we can and will achieve in the months and years ahead with Xero Tax.
The Government’s digital tax initiative is still in its infancy - so we will also continue to develop the right tools to support the upcoming phases. For income tax capabilities, we are working with HMRC so that we are ready in time for the 2023 deadline.
It’s been a difficult time for many accountants. So any future changes on the horizon might not always be welcome. But ultimately, what the pandemic has shown us is that digitisation is a huge opportunity for the industry to level up. It will mean less paperwork and fewer mistakes.
Firms will come out of the pandemic more resilient, with more time to focus on advising clients and growing the business.
About Xero Tax
Corporation tax and Accounts Production for micro and small companies is just the beginning.We’ll continue developing our Accounts Production tools for LLPs, Dormant, Charities, Sole traders and Partnerships. Future modules include:
Complete self-assessment tax returns for your clients. We'll also be working with HMRC to provide a MTD for Income Tax solution.
Allocate profits to partners having analysed the P&L and balance sheet directly from Xero to complete the partnership return.
Trust and Estates
Calculate tax payable by a variety of trust types and submit forms directly and securely to HMRC from Xero Tax.
If you’re an accountant or bookkeeper in practice, sign up to the Xero partner programme and get Xero tax. You’ll get the tools, resources and dedicated account management to help get your practice and clients set up for success. Visit Xero Tax to get started.
This guide is intended as general information only. Always check with a professional for advice. This should not be seen as a substitute for professional advice and we aren’t liable for your use of the information in that way.