Simplify compliance: Xero makes tax season easier

Learn how Xero’s tax and accounts production solution can help.

A tablet showing a submission to the HMRC using the Xero app.

While a steady flow of work is usually the goal, it’s rare that practices and their clients aren’t facing extremes. You can go from mountains of work during tax season, to months of quiet as clients gather information for you – before bringing you a pile of receipts to process. Tax season can be a particularly trying time for accounting professionals and their clients.

Instead of spreading work across the year, compliance tasks are sometimes 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 can help with this, by providing safe and secure data storage and access to up-to-date financial data. Plus, we’re bringing partnership tax to Xero so you can serve even more of your clients and their compliance needs.

One tool for compliance

Xero Tax is a cloud based and accounts production and tax filing software. You can quickly compile returns and sets of accounts and tax returns 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. Your clients can save time too – instead of wading through a box full of receipts, they can snap a photo and upload it to our software, and the information will automatically be captured in 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 online returns to HMRC – is available in Xero.

Connected data sources create a single source of truth across the whole Xero platform. Xero is entirely cloud-based and you can enter the data once, in one place. This means less admin for you and your clients, but more consistency and accuracy of data across Xero.

Unlike traditional tax solutions, the tax return is an extension of Xero bookkeeping, so there’s no need to import or reupload the bookkeeping data. Keep on top of client records and reconciliations, and the annual tax process is much easier. Why? Because you already have accurate financial data from bookkeeping processes. This also means you’re not at risk of losing the most up-to-date or accurate version of the data – it’s synchronised across Xero tools.

And because Xero Tax is a collaborative tool with a step-by-step workflow, you can share the workload more easily. Your team can work together on returns (without anyone needing to sign out of the software first). And you can turn draft returns into documents for clients to approve and sign, using document packs.

Why now is a great time to try Xero Tax

Digitalisation is the direction of travel for the UK tax system, and consequently, accounting and bookkeeping practices too.

We’re working to make sure Xero Tax is always prepared for new legislation, so you don’t need to panic about finding extra tools for new rules. With MTD for ITSA around the corner, having a comprehensive tool for managing compliance can help you ease into the new rules.

But we’re also looking to make things more efficient for your practice and clients, meaning compliance is less of a headache.

Companies House Reform will soon make software filing mandatory for certain businesses. And Xero users already have access to tools compliant with this legislation. You can start filing Companies House returns today and know you’ll comply with the upcoming rules.

Quicker processes

In 2024, more than one million people missed the Self Assessment deadline. No doubt there are a range of reasons why people file late, 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.

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

Easier time management

Connected bookkeeping data from Xero to Xero Tax means you can start working on client jobs earlier and spread them across the year. Filing returns and sets of accounts is much easier with Xero Tax, because accurate financial data flows through from Xero bookkeeping. You don’t need to validate the data again in Xero Tax, because it’s already verified during the bookkeeping process.

Soon, we could see an end to the last-minute rush as client data will be on hand and up to date, ready for filing accounts and returns. After all, it’s very rare that you’re just working on a single return. Instead, you probably have a stack of client accounts and returns to submit at the same time – which leads us to the next key feature: Tax Manager.

This gives you a real-time view of your tax obligations for company tax, company accounts, personal tax and VAT — all in one place, enabling you to work more efficiently, collaborate with clients more effectively, and manage everything for your practice within Xero Think of it as a pair of binoculars for your practice – you can see everything that’s coming up, in progress, and delivered. It makes prioritising tasks a doddle.

Even simpler compliance with partnership tax coming soon

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’re bringing you partnership tax.

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

The tax return is an extension of the bookkeeping so there is no need to import or re-import the bookkeeping data. You 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 within Xero.

By keeping on top of bookkeeping and reconciling bank transactions, accounts and returns can be prepared quicker for sole traders, limited companies, and – now – partnership clients. Filing returns and sets of accounts becomes simple and accurate, and you can be confident that you’re using the right data every time.

Make compliance more manageable for your practice and all client types. To access partnership tax – and everything else mentioned in this guide that Xero tax has to offer – you need to join Xero as a partner to use Xero Tax for free. Become a Xero partner today and enjoy easier, hassle-free compliance.

Become a Xero partner

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