Paperless tax processing

I understand that most tax practitioners may have their hands full at this point, but if you've got a few minutes spare, I would be really interested to hear to what degree you have managed to introduce paperless techniques to your tax work.

It appears to me that much of the SA workload is predictable and relies on certain recurring types of document, so that it would lend itself well to scanning source documents and handling them on screen. But how many practitioners are actually doing this and where do the obstacles appear?

I'm preparing an article around this subject and would welcome feedback from all quarters about what you're doing now - or how you'd like to do it when you get over the January deadline.

I look forward, too, to hearing Charles Verrier's thoughts on the subject.
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John Stokdyk, Technology editor

Comments

paperless

pauljohnston | | Permalink

Whilst your comments go someway towards the truth I suspect the best way forward is to visit a local practioner.

Repetition in SA can help but most paperless systems receive vast amounts of paper.  So what I am saying is that the output is very high perhaps 95% straight into a paperless system but input is a lot less - many clents still send paper.

For us the real benefts are being able to retrieve information quickly and having our records protected against damp and mildew and loss.

Disadvantages are that clients expect a much faster response.

 

ksalter's picture

Paperless Tax

ksalter | | Permalink

The biggest advantage in tax of paperless systems is the reduced output - especially where client portals are used to upload tax returns that can run to 40 or 50 pages sometimes. No photocopies of returns any more - just electronic copies.

Also obtaining just a signed page back saves lots of paper flying around too.

Paperless Tax Returns

appacc | | Permalink

What I do in a simple case:

I have a plastic wallet with the customers name on a sticker on the front. It is in my 2009-2010 file.

When he sends me something connected with the tax return like a coding notice, I keep the paper in the wallet.

When I do the return on 6th April next year (smile) I will have some interest and dividend statements, P60 and maybe some self employed workings.

I'll do the tax return and print to a .pdf file in a Windows folder for this customer for this year. Send a letter which I print a file copy and I print a summary 3 page return from my PTP software.

Customer signs return and I submit electronically. I print the email acknowledgement.

By then, I probably have 10 to 15 documents which I scan to a .pdf called tax return workings.

I shred everything unless its for next year in which case I keep it in the wallet.

Then the usually emplty wallet goes into the 2010-2011 file where I hope it will stay till next year.

Any queries can be resolved by viewing the .pdf workings, spreadsheet or Word document.

Keeping the paper as I work through the job enables me to spread it over the desk and ensure I do not miss anything. But once the job is finished, it's most likely that you never want to look at it again.

Paperless tax Returns

pauljohnston | | Permalink

Can I suggest that this poster consider two screens and scan the paper as it is received.  Rather than printing out the letters for the client and then scanning can I suggest that he at that that time makes a paper copy that he also makes an electronic copy.  Scanned images take up a much bigger space than one that is created on the hard driver

An excellent backup system is essential

ShirleyM's picture

Procedure

ShirleyM | | Permalink

As our clients are very small, and the majority are still not into the 'electronic age', we do the following:

Scan clients tax data into annual folder.

Prepare SA, SA & backing schedules saved to pdf into annual folder.

Backup SA data to annual folder from tax software.

Print copies of SA & backing schedules for client.

Print copy of SA (and online authorisation) for client to sign, then scan signed copy into annual folder.

Submit SA electronically and file HMRC email acknowledgement into annual folder.

Renew SA data backup.

All data received from HMRC is also scanned & filed. We also have an annual work spreadsheet which is updated with 'points to watch', overlap profits, losses carried forward, recommendations, etc., and filed into the annual folder.

We have multi montors, and we have Sage document management but have found it easier to file tax data into a specific annual folder in pdf format.

We have used this system for about 2 years, and the bonus of using the above system, is that we have had no problems changing tax software as all necessary data is already extracted from the software.

ksalter's picture

HMRC acknowledgments

ksalter | | Permalink

In the comment above it is noted that the HMRC response is printed out .... why not print to PDF too and save in client folder - or annotate with a sticky note - (copy and paste the text) onto the original submission using PDF editing software and resave the PDF? An advantage with some document management systems is that "sticky notes" can be added to documents filed where again this can be copied and pasted.

(More ideas in the "Practical Guide to the Paperless Office" available at http://www.bbscomputing.co.uk)

 

 

 

What do people do about retaining the original authorisation sig

chatman | | Permalink

Presumably most (if not all) people retain the original signed page of the return, and maybe a signed letter accepting responsibility for the content.

I have been considering not even retaining this. If a client responds by email, providing specific authorisation to file the return which has been sent to them by email, surely this would be accepted by a court of law if such authorisation were ever challenged by the client.

I suppose the difficulty may be proving the authenticity of the emails, but I am sure this could be done (correct me if I am wrong).

What do others think? I would love to be able to get rid of this extra piece of paper.

ShirleyM's picture

HMRC emails

ShirleyM | | Permalink

We use Outlook, and we just click & drag the acknowledgement email to the clients annual folder

ksalter's picture

Signed pages

ksalter | | Permalink

We are happy to accept email approval - again document management as opposed to Windows folders proves it was filed when you say it was filed etc.... There are methods of having "electronic signatures" if you wanted to go to those lengths.....

Document Management system

Anonymous | | Permalink

I am planning to go paperless and wondered what document management system would users suggest both cost effective and ease of use ?

Proving the authenticity of an electronic document

chatman | | Permalink

What is the cheapest way of storing a document in such a way that its authenticity can be proved?

cverrier's picture

Signed pages....

cverrier | | Permalink

You don't need the signed pages - an email is fine.   As for proving the authenticity of an email - while there are ways of faking them, the practical reality is that emails are accepted by (Civil) courts every day of the week.

It's good if you can have the client's authority to file in conjunction with the IR Mark for the specific version of the return that they are approving.  As the mark changes when any of the return's content changes, you can use this to show that your filing was identical to the copy that the client saw and approved.

So...if sending a draft return as a PDF to a client, asking for approval, make a point of using the IR Mark number as the identifying reference for the document - particularly if several versions have gone to and fro.

 

Thanks cverrier

chatman | | Permalink

A very useful response. I think I will just start binning those signed pages after scanning them.

ShirleyM's picture

The ups & downs of the paperless office

ShirleyM | | Permalink

Due to everything being available from the PC, we are getting fat! (That is our excuse anyway!)

Maybe we should install a treadmill to replace the walking about we used to do, or have a regular 'walk about' session each hour.

Joking apart, it was a godsend the other week when I couldn't get to work because of the snow. I logged onto the terminal server and was able to get all the information I needed. I am a definite convert to the paperless office.

petersaxton's picture

speed v space

petersaxton | | Permalink

Most of my clients send their documents by pdf, I send their tax returns to them by email and accept authorisation to file by email. I also use outlook to file emails by client folder. When a client is not computer literate I have printed a copy of the tax return for them to keep and print another copy for them to sign and me to retain. I have just realised I may as well just print the page for the signature. I can either file that or scan and shred.

Given that I am a sole practitioner with no employees I try to trade off speed against space.

alan.rolfe's picture

Convenience v Paperless

alan.rolfe | | Permalink

We have adopted a half-way house for many of our procedures.

While all small documents to and from the client are scanned to the DMS immediately, the larger Tax Return packages of information remain in paper until the Return is submitted, when the whole lot is scanned in as a single multi-page item.

The reasons we found for not scanning and working with electronic documents immediately:-

(1) So we can make notes on original documents (e.g. putting a calc of shared interest on the photocopied interest certificate, etc.)

(2) So the manager reviewing the job can tick documents to confirm that they have been seen and checked (which we believe helps with the external quality assurance reviews our files are subject to).

(3) It is easier to work with pieces of paper, even though we all have dual screens.  Until we find a suitable PDF tool to allow viewing, editing, reordering, etc. in a quick, easy and efficient way we will stick with paper at the processing and reviewing stages.

(4) We haven't worked out a procedure for scanning documents on receipt.  My feeling is that proper "workflow" software would be needed and we haven't wanted to spend out on this yet.  No doubt this and solutions to points 1 to 3 above will be adopted in due course, but we are not there yet.  Cost is definitely an issue, as some solutions seem very expensive.

 

 

cverrier's picture

CCH Scan

cverrier | | Permalink

At the risk of this post sounding like a plug for my old friends at CCH, their 'CCH Scan' product is clearly where things are heading.

CCH have been gradually building towards the goal of a fully paperless way of dealing with tax source documents.  The first phase of this was to offer a simple place to organise scanned source documents into various categories, (an electronic version of the concertina files used by many tax departments for organising client records in advance of actually processing the return).  Once everything has been scanned and organised, the software then let you generate a single electronic PDF 'pack' for archiving.

The next step was (and still is) much harder - using the software to analyse the content of the scanned documents to automatically identify the document, file it under the correct heading, and then extract the numerical information into your tax software.

Of course, actually doing that is really difficult - with the endless variety of source documents that come across any tax practitioner's desk.   CCH are very brave to attempt this, and they've put a lot of effort into making the software act in a 'fuzzy' way ("Look for numerical values positioned somewhere to the right of anything saying 'Gross Pay'")  rather than too rigidly ("look only in a small rectangle exactly 200mm down and 38mm left from the corner of the page").   The software can also be 'taught' to recognise forms it can't understand, so it does understand them the next time one is scanned.

The big risk, of course, is that a system like this has to be trusted by staff so that they actually save time using it (rather than double-checking everything it does and so taking longer than they did when they just used paper!)

This is all down to the transition we're experiencing.   We're moving from a pure paper world to a purely on-line one, but the process is gradual, and it's always the border between the two that causes the pain.   You can see this with iXBRL as everyone wrestles with tagging tools.  Once bookkeeping and accounts prep software catches up, tagging tools won't be needed (mostly!).

Electronic P60's are now here, as are electronic 64-8s (more or less!).   HMRC's Real Time Information project for PAYE is on the way.   The direction is clear.

 

cverrier and irmarks

pauljohnston | | Permalink

The problem that we face is if the client brings to our attention a problem say an wrong NI No or gives us his or her bank details the IR Mark changes but nothingelse on the tax form does.  Normally this info is provided with the signed form. Currently the changes are noted in our paperless office but the revised return has a different IR Mark

I am not sure how we can easily show the correlation between the IR Marks except thru our paper trail.

petersaxton's picture

Different pdf's

petersaxton | | Permalink

"I am not sure how we can easily show the correlation between the IR Marks except thru our paper trail."

Why not with different pdf's?

Digita's FileCabinet saves as many pdf's of a tax return as you want.

PUREaccountants's picture

Great ideas here

PUREaccountants | | Permalink

OK, so I've long been an advocate of cloud and paperless and slowly this happening. Our big breakthrough (2 partner practice) is that we have moved all clients to Xero, secondly we can scan all purchase invoice docs to Xero automatically coded (or not if so be it), import the bank statements automatically (or upload if nec.) and generate a set of accounts.

The cool bit is that from there our Xero ledger imports directly to IRIS (after a bit of mapping), and can push automatically to IRIS tax software too. Genius, a large proportion of the work completed.

Now the SA return may well need a whole host of additional info so we now scan all source documents to Dropbox to the client folder 2010-11. All source docs can then be returned to client or shredded (my particular favourite) once we know that they are useable (completed as they are scanned). 

Our team of tax guys can then process the file as necessary knowing that all docs are available. Once the statutory accounts and SA is completed we save a copy to Dropbox. Most of our clients are now using dropbox too (as they see the benefit to their own business and lifestyle - and no not all of our clients are 20 something web geeks- our first adopters were a couple in their 80's who happily signed an iPad) so if any docs are missing they too can scan to it. Most importantly though they can see the file before we talk to them. 

They can print/download as they wish and we schedule a call to talk through liabilities/rebates as necessary.

This year more clients are purchasing proper scanners for their own SoHo, Canon 20/2510's if you're wondering and seeing how paperless can be achieved. 

We are so convinced of this that we are setting it as part of our terms of business.

PUREaccountants's picture

Define DMS

PUREaccountants | | Permalink

Hi,

The first question is what is DMS. For me it is nothing more than a way of storing and accessing documents easily. So in its simplest form that a file structure on your computer such as C:/User/Clients/xxxxxx

to get the documents to the system you need a scanner. We use and recommend the Canon range. As we're also Mac users we have opted for the Canon 2010M or the newer 2510M (drop the M for PC versions).

Connect up and away you go - scanning to your folders of choice.

Now if you want to go virtual then you'll need a way of getting those docs in the ether. We use Dropbox, why? simple.

We could have built our own portal on our web serve, but the cost of maintaining the storage and security would be prohibitive for a small business. We looked at other systems such as livedrive.com and similar but they didn't integrate well with things like our iPhone/iPad or other mobile devices. So then we considered how our clients might use it. So far so good, roughly 70% of our clients have installed the Dropbox desktop app (for Mac & PC) and opened their own free account too. 

Now all we do is use Dropbox as our main storage drive on our Macs. Its there permanently soaking up all those annoying bits of paper, I can now view everything (including my own post) on any machine i chose wherever i happen to be working from.

I looked in the past at systems such as INVU and others but quite frankly unless you're a ten partner firm I struggle to see the benefit (the old web 2.0 apps v's desktop solutions again). 

So checklist.

1. Buy scanner

2. Sign up for Dropbox

3. Create file structure

4. Scan all new documents to folders

5. Save all docs to Dropbox (we always use PDF form)

6. Scan all pre-existing docs to Dropbox

7. Save time

8. Save money

9. Enjoy yourself a bit more!

 

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