How to achieve tax compliance with Xero Tax software for accountants

Published Thursday 19 June 2025

Tax compliance has always involved a lot of hard work from accountants and bookkeepers. And, in the last few years, MTD for VAT, Basis Period Reform, and Companies House Reform have led to increased requirements for practices. With MTD for Income Tax on the horizon too, there’s plenty more changes to come.

While a steady flow of work is usually the goal, it’s rare that practices and their clients aren’t facing extremes. Instead of spreading work across the year, compliance tasks can be bunched up in the final weeks before deadlines. This isn’t made easier by the timing of taxes; most limited companies have a December or March year-end, which means busy times are nine months after. And let’s not forget the Self Assessment deadline at the end of January. Plus, there are VAT filings and day-to-day work to squeeze in too.

Practices need something that makes compliance simple. A system that’s easy for the whole team to use; where collaborators can work on tax returns together, and where client transaction data is automatically pulled through to draft submissions.

Xero Tax, our tax software for accountants and bookkeepers, can help with this by providing safe and secure data storage and access to up-to-date financial data. Plus, we’ve introduced partnership tax to Xero so you can serve even more of your clients and their compliance needs.

How Xero Tax helps your accounting practice with compliance

If every compliance task was less time-consuming and more manageable, you’d have time to spend elsewhere in your practice. Perhaps you could offer new services or focus on upskilling.

Xero Tax is cloud-based accounts preparation and tax software for accountants. It’s designed to save you time on admin, and because Xero Tax supports a range of taxes and compliance tasks, it’s tax software UK practices can rely on for serving their client base.

1: Faster tax filing with automation

With Xero Tax, you can quickly compile returns and sets of accounts for submission to HMRC and Companies House, using bookkeeping data from your clients’ Xero organisations.

There’s no need to copy information from one place to another. Everything you need is right there, in Xero Tax. Client records flow through from Xero’s core bookkeeping product to draft returns in Xero Tax, ready for you to review and submit.

Your clients save time when you use Xero, too. Instead of wading through a box full of receipts, they can snap a photo with our document capture tool and upload it directly to Xero.

You don’t need to jump between compliance tools to complete a return. Everything you need – client information, transaction data, and the ability to submit accurate online returns to HMRC – is available in Xero.

2: One connected platform for all of your compliance tasks

Xero is entirely cloud-based, and data entered in one place is reflected elsewhere in the software. Xero features and integrated apps connect in Xero, to make it a single source of truth. This means less admin for you and your clients, and more consistent and accurate data.

Unlike traditional tax and compliance software, the tax return is an extension of Xero bookkeeping, so there’s no need to import or reupload the bookkeeping data. If you keep up with client records and reconciliations throughout the year, tax season is much easier, because you already have the data you need ready to complete returns. Once the data is pulled into a draft return, you just need to review and submit it.

3: Collaborative tools for healthier workloads

Xero Tax is collaborative software that lets you share the workload easily. Unlike desktop tax and compliance software, your team can work together on returns, thanks to unlimited user features.

For easy delegation, you can assign specific roles such as ‘preparer’ and ‘reviewer’ to your team, to ensure every tax return goes through the right quality checks. Managing client sign off with Xero is simple too. You can package draft returns for clients to review and sign, using document packs.

Why choose Xero for tax management software?

Xero makes it easier to manage multiple compliance obligations for a range of client types. You can use the same software processes for everyone, and these processes scale with your practice – whether you’re serving 10 clients or 1000.

But, that’s not all you can do with Xero Tax.

Be ready for new legislation ahead of time

Digitalisation is the direction of travel for the UK tax system, so that means accounting and bookkeeping practices need to adapt too.

We’re working to make sure Xero Tax is always prepared for new legislation, so you can rely on a single piece of software for all of your regulatory compliance needs. With MTD for IT around the corner and software filing requirements for Companies House, having comprehensive compliance software can save you the stress of finding extra tools.

Xero Tax users already have access to tools compliant with Companies House reforms. You can start filing Companies House returns today, knowing you’ll comply with the upcoming rules when changes come into place.

But, tax filing software for accountants shouldn’t just be about compliance – it should also make daily practice tasks more efficient. That’s why Xero comes with a suite of bookkeeping, accounting, and practice management features to keep things running smoothly. Automate bank reconciliation, schedule work for your team, and track practice productivity all from within Xero.

Avoid the last minute scramble

In 2025, more than one million people missed the Self Assessment deadline. No doubt there are a range of reasons why people miss Self Assessment deadlines, but better processes can help you and your clients avoid the last-minute scramble.

With the right tools, you can knock off some time (and stress) from your compliance tasks. Using Xero Tax, everything you need to complete a client submission – from their bookkeeping to accounts and tax returns is all in one place.

Clients can use document capture tools to upload receipts and invoices to Xero. From here, you can use the reconciliation predictions feature to suggest matches for transactions and speed up data processing. Then, records flow into draft returns in Xero Tax, ready for you to review and submit.

Partners tell us Xero Tax helps them streamline their workflow and increase profits, by automating time-consuming tasks and creating the potential to increase their service offerings.

“If I’ve got half a dozen tax returns to do I now know it’s probably going to take me 2.5 - 3 hours to do the lot. The first two returns I did I actually had to go over a couple of times because I thought this can’t be this simple. But it was that simple.

So, after that I might go to the park or take the dog for a walk. I’m at that stage in my life where work life balance is very important to me and this gives it to me.” Andy Housley, Square 1 Accounting.

Expand services with partnership accounting software

The more you can do with Xero Tax, the less you need to spend on additional costly compliance tools. So, along with personal and corporation tax, we’ve introduced partnership tax.

The addition of partnership tax means Xero Tax software for accountants now covers the core tax types, enabling you to serve the majority of your client base with one platform. No need for multiple, disconnected tools.

You also have the ability to validate the tax return with Xero and HMRC to reduce the risk of incorrect data and filing errors. You just need to check through the information and confirm everything is there before filing directly to HMRC from Xero.

By keeping on top of bookkeeping and reconciling transactions, accounts and returns can be prepared quicker for sole traders, limited companies, and – now – partnership clients. Filing returns and sets of accounts with our tax compliance software is simple, and you can be confident you’re using accurate data every time.

Handle multiple obligations with Tax Manager

Having a clear view of what’s in progress can give you peace of mind during busy spells.

Xero Tax Manager gives you a real-time view of your tax obligations for company tax, company accounts, personal tax, and VAT – all in one place. This makes scheduling and prioritising work easier, so you can operate more efficiently and collaborate with clients more effectively.

Xero Tax also integrates with Xero Practice Manager, our product for taking care of your entire practice. With Xero Practice Manager, you can assign jobs to staff, track the progress of each individual task, and see the status of work in progress. You also get access to reports on productivity, profitability, and work in progress, so you can see exactly how your practice is performing.

Think of Xero Practice Manager as a pair of binoculars for your practice – you can see everything that’s coming up, in progress, and delivered. It adds another layer of oversight to Xero’s tax compliance software, and makes prioritising tasks a doddle.

From tax season to tax celebration

Make compliance more manageable for your practice and clients. To access partnership tax, and everything else mentioned in this guide that Xero tax compliance software offers, you need to join the Xero partner programme (to use Xero Tax for free).

Become a Xero partner today and make tax and compliance work hassle-free.

Tax software FAQs

How to choose the right tax management software

There are several things to think about when choosing tax and compliance software.

First, you need clarity on your client types and their requirements. Do they need to file personal tax? Corporation tax? And what about VAT? Software that covers several tax types will enable you to serve more of your client base with a single subscription – saving you the added cost of extra tools.

You should also consider current and future legislation. Changes like Making Tax Digital, Basis Period Reform, and Companies House Reform have all had an impact on how taxes are filed. The software you pick should align with current regulations and offer updates ahead of new legislation.

And, finally, you need to think about your teams’ digital skills and client capabilities. Complicated software could involve lots of training and slow your team down. Beautiful, simple tax and compliance software should make tasks easier and help your team work more efficiently. Tax return software for accountants and practice teams should also be simple for clients to engage with, should they need to use it

How does tax software for accountants work?

The features and tools you get from tax software depend on the provider you choose. But, for the most part, modern tax compliance software that aligns with UK regulations will enable you to prepare and file a range of tax returns on behalf of clients.

Some providers offer additional features to make compliance easier. For instance, Xero offers a live testing feature so you can check whether a return will be accepted by HMRC before submitting it. It’s an extra tax compliance check that’s taken care of for you.

Why is tax software important for HMRC compliance?

For many submissions to HMRC, tax compliance software is essential. Under MTD for VAT, all VAT-registered businesses need to use MTD-compliant software to keep digital records and submit returns. And, from April 2026, sole traders and landlords will need to start using MTD software to file Income Tax, too, assuming they own over £50,000 per annum. Sole traders and landlords earning above £30,000 will need to use MTD software for Income Tax from April 2027. And, those earning above £20,000 will need to comply from April 2028.

Tax filing solutions that support HMRC compliance can also offer extended benefits for practices and clients. Tools to speed up admin, storage for client records, and reports that help you track client financials are available from modern accounting software providers, too.

How does partnership accounting software help with compliance?

Partnership accounting software enables you to prepare and submit tax returns for ordinary partnerships – not just personal and corporate tax. When you can cover more tax types with a single piece of software, it means you need fewer processes to get the job done. And, your team only needs to be proficient in one piece of software, making it easier for them to build competence and meet compliance standards.