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AIA

FreeAgent to offer SA tax filing

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16th Dec 2013
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The cloud accounting application FreeAgent Central will move into tax preparation in January when it launches a new module capable of compiling and filing self assessment tax returns.

The program, which won AccountingWEB’s 2013 Software Satisfaction Award for small business accounts, is widely used by sole traders, freelancers, contractors and one-person limited companies. The new feature has already received a warm welcome from this group, but FreeAgent is also pitching it at the accounting profession as a mechanism to manage freelance clients’ accounts and returns during the busy self assessement deadline rush in January.

There will be no extra charge for the service, which is bundled into the web-based system.

“This is us trying to get something out there to help with SA season,” said FreeAgent founder Ed Molyneux. “We realise how under the cosh accountants are in January. This is a tool they can offer the client during the last minute rush.”

Extending FreeAgent into personal tax was always part of the company’s agenda for “frictionless compliance”, he explained.

“Our idea was that you should be able to do everything you need in FreeAgent. If you have all the accounting data in a system that lends itself to automation, why not use it? We’re just getting to the point where we can do that.”

The FreeAgent module will pre-populate around 90% of the fields in the self-employment return, and includes an on-screen version of the tax return for users or their accountants to complete the rest. The timing of the SA module is designed to help with the January SA rush, but property forms, limited companies and corporation tax facilities are all on its development roadmap.

“We’re not limiting ourselves to what accounting software should be,” said Molyneux. “Our users track income, manage banks and need to file tax returns. There’s no distinction in their mind that one product stops here and another starts there. They’ve got a job to do. Our focus led us to wrap this all together, because that’s the best way to deliver an overall solution rather than an arbitrary division.

“We can already do a P&L, so it makes sense to do that so you can submit it alongside the corporation tax return. We have most of the numbers already and it’s much shorter form.”

Because FreeAgent already uses iXBRL to define its accounting data fields, CT return functionality and filing should be fairly simple to achieve. “It’s just another function, let’s just wrap it up,” he said.

While the product is focused on the needs of freelancers and contractors, Molyneux assured tax professionals that the software was not designed to lure away their clients. “This is as much about the workflow of the accountant as the client. When we talk to our customers about their tax returns, very few say they’ll do it on their own. They want someone to look over it for them. So [the SA functionality] is about collaborating with accountants and clients to streamline the process,” he said.

“We’re not trying to compete with the IRIS, CCH and Digita that’s too difficult. We can’t do all tax software for all situations, but we can do something for our subset of the market. The value is connecting that to the accounts system. That’s achievable and worth trying to do and sit alongside the more capable tools in the market.”

Replies (16)

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By johnjenkins
16th Dec 2013 14:01

So John

How long before HMRC have a cloud based system that will do away with Accountants and we are only left with Tax specialists.

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By Michael C Feltham
16th Dec 2013 14:13

Of course, whilst a nice idea, all of this presumes the user actually knows what they are doing....

In my own - significant - experience of SMEs from Micro Enterprises through Class Size Zero to above and beyond, a majority haven't a wee clue.

I am presently embroiled in trying with great difficulty, to unravel the affairs of a close company: the "Accounts" were prepared  by a series of bookkeepers using Sage.

The latest, replete with certificates in Sage competency doesn't even know the singular difference between Revenue and Capital items!

'Twas ever thus.

Since I am old enough, sadly, to have cut my teeth on mainframes, the old acronym GIGO, holds true more than ever today.

 

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By carnmores
16th Dec 2013 16:25

@Michael

hope you still have some teeth !

 

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Replying to DAS:
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By Michael C Feltham
16th Dec 2013 16:47

@carnmores

 

Well, just a few.

Many have been lost through the constant knashing process, caused by dealing with such as HMRC!

 

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Teignmouth
By Paul Scholes
16th Dec 2013 16:51

Hold on a min

Johnjenkins - HMRC already enable people to do their own return and, if you're a company, you can do & submit accounts & tax returns.  Whether we like it or not, (and whether they [***] it up or not) that's progress and, in a recent survey, 30% of small businesses don't have an accountant.

It wasn't that long ago I wouldn't have let a client near a VAT return or Payroll, now, I prefer them to do it. As Ed says, what's the difference?

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By johnjenkins
16th Dec 2013 17:32

@Paul

There is a big difference between some people doing their own returns and all info put on cloud systems by all business for HMRC purposes. Then HMRC issue tax bills on that info and it is up to us to challenge their figures. Won't be long.

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Teignmouth
By Paul Scholes
16th Dec 2013 21:23

@John

Sorry, I don't understand what you mean.  

All that's being provided above, is the natural extension to bookkeeping to enable tax return preparation & submission, in exactly the same way that Iris, Xero and other providers do at the moment, only in their case, with their large accountant base, they shy away from providing the functionality to the business users.

Are you talking about the ability of the software to transact directly with the government, ie cutting out the middle-person (be they user or accountant)?  If so, that too is a natural progression and will come eventually, just as will supplier & customer computers talking to each other to cut out human intervention.  

Yes, it further cuts down the form-filling, number crunching, compliance role that some of us still rely on but that's been diminishing for 40 years, and I don't see that anything we can do will (or should) stop it.

Apologies if I'm still none the wiser.

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By Michael C Feltham
17th Dec 2013 11:56

On a further comment, I am presently in process of trying to create some logical financial order from a various set of "books" kept by a company.

The earlier years were entered by a general office admin person using Sage; who left.

Another office admin person was engaged and demanded a newer version of Sage "'Cos it's far better!".

Translation: "I only know how to use the new version!"

Yet another move delegates the bookkeeping role to a young man hot from college clutching a Sage Certificate of Competence......... and yet a further version of Sage.

Core problem being he doesn't know the difference between Revenue and Capital and believes credit card balance payments made by the company somehow seem to be expenditure.

And perhaps his best one yet: Director's Loans made to the company have become "Sales"!!

Logically, if a person hasn't a wee clue about correct bookkeeping, then no software system yet invented can work and be accurate.

 

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By johnjenkins
17th Dec 2013 12:24

@Paul

Spot on. HMRC now have the "bother" of investigating our figures to improve their cash flow. Within the next 10 years it will be the other way round. The article more or less spells that out. I do not think that is NATURAL progression. I'm not a believer in cloud systems. I think the powers that be need to sit down and think about where all this new technology is leading us. Perhaps a few years where we can get used to what's happened already. There just doesn't seem to be a breather. I fully embrace new technology with open arms but we need to slow down and assess what WE really need for the future of Accounting and Taxation.

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By David Treitel
17th Dec 2013 14:18

And for the Americans in the room?

Am I too hopeful to expect that the software will also automatically prepare US individual and US informational tax returns for those several hundred thousands Americans here in the UK?

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Replying to Tax Dragon:
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By David Treitel
18th Dec 2013 21:09

Keep looking for Americans

Michael C Feltham wrote:

@ David Treitel

 

Wholly different system.

All depends, in any case, whether they are fiscally resident in the UK, really.

Point of interest, TaxCalc was originally a US product, the name licensed by Which when they developed the UK version.

Presumably, US Ex Pats living in the UK part of the year, are tax resident elsewhere?

Any sense and that's Andorra!

Grin!

 

 

Michael - We have several hundred thousand American citizens here in the UK including for example such folks as Boris Johnson (born in New York city), Stella McCartney (born in the UK to a US citizen mother) and Harper Seven Beckham (born in Los Angeles). Most UK accountants will naturally find they have a few US citizen clients among their client base; all of whom have mandatory annual US filing obligations in addition to any UK tax returns required.
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Replying to andy.partridge:
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By Michael C Feltham
19th Dec 2013 18:14

@ David Treitel

Well, David, I have and have had clients with tax reporting obligations in France, Spain and at one time, Australia.

Never had any US citizens though.

From my little experience I would suggest IRS compliance is extremely different to UK: as is French tax reporting compliance.

We tend to enjoy a relationship with local firms, where a client has dual reporting obligations, since it is simply not cost effective to try and adequately comprehend disparate tax codes and laws and purchase discreet tax processing packages for those jurisdictions.

 

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By carnmores
18th Dec 2013 17:12

the early versions of quickbooks
Produced a report that could be entered straight onto a tax return as i believe they were going to tie it into their tax product unfortunately that went the way of quicken and was a strategic error as is simple start

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By the_Poacher
31st Dec 2013 13:54

Company Tax?

Here's hoping they do the CT600 etc for free too!

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Teignmouth
By Paul Scholes
02nd Jan 2014 09:31

Company Tax

the_Poacher - as you will need iXBRL accounts as well as the return you may have to wait a bit longer but this is the way that most Cloud systems will go.  If you think about it, as long as you have a suitable nominal structure and the ability to do some notes, producing a set of accounts is not that much more involved than producing a VAT return.

Yes, the person reviewing, correcting and hitting the button has to know what they are doing but, these days, I find the ins & outs of VAT returns (with all the EU stuff) as complicated as a set of stat accounts.

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