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HMRC enquiry and Xero

How to send cloud accounting records to HMRC for enquiry

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We have moved our VAT registered clients to Xero over the last few years; partly to ensure they are MTD compliant, and partly because it works better for the client and for us. We now have an enquiry into one of these clients and HMRC have asked that, if the records are held on computer, we send them electronically. We have told them the records are in cloud accounting software and suggested they have read-only access to the system, which would provide them with all the information they have asked for including PDFs of the invoices. Three months later, the reply from HMRC is that the only method they will accept is for us to put everything into Dropbox for them and I get the impression that the inspector has no idea what cloud accounting is. I don't think there is any way we can do this so will probably have to revert to sending a box of paperwork to HMRC's totally incompetent central scanning department. This is incredibly frustrating because we have taken steps to update accounting systems to comply with HMRC's new requirements, only to find that most of their people are still at least 10 years behind the rest of us! Has anyone else had similar experiences or any ideas on the best way forward?

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16th Jul 2019 10:28

Export what they want as CSVs or PDFs and put them in Dropbox.

I wouldn't suggest ever giving HMRC access to the records, just hand over the items they specifically request.

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to Duggimon
16th Jul 2019 11:59

Thanks, but going through Xero downloading the PDF's one-by-one would take a disproportionate amount of time and separate each document from the transaction it relates to. They've asked to look at pretty much everything so read-only access makes most sense.

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16th Jul 2019 10:32

You're right. What's the point of HMRC insisting all this stuff goes on line if they want you to print it off for them ?

Tell them what you said in your post. You updated your systems to comply with HMRC. It's time HMRC updated their own practices.

Trot out the usual excuses, disproportionate effort involved, etc etc and keep taking the matter to a higher level until they give in.

You can also complain to your MP; one day the penny will drop in Parliament about how badly HMRC is run.

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to lionofludesch
16th Jul 2019 13:25

lionofludesch wrote:

You're right. What's the point of HMRC insisting all this stuff goes on line if they want you to print it off for them ?

Tell them what you said in your post. You updated your systems to comply with HMRC. It's time HMRC updated their own practices.

Trot out the usual excuses, disproportionate effort involved, etc etc and keep taking the matter to a higher level until they give in.

You can also complain to your MP; one day the penny will drop in Parliament about how badly HMRC is run.

I would give the narrative in Lions paras 2&3, send an export of the VAT Audit and say that you’ll send them copies of the specific invoices that they require.

When they say “all of them”, repeat your initial narrative and ask for the specific reason for each invoice that they want.

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to atleastisoundknowledgable...
17th Jul 2019 09:06

Are they actually asking for copies of all invoices and receipts or are you imputing this from 'all the accounting records'. I would export all transactions for the period into a pdf and/or spreadsheet (work of a moment with the Account Transactions report) and, if you are feeling friendly, pdfs of the 10 largest input tax invoices. All done in one email...

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By NH
16th Jul 2019 13:25

and if you did give them access how would you restrict their access to only the year under enquiry, or maybe you are not worried about that?

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to NH
16th Jul 2019 13:43

That's a very good point, thank you. Not at all worried about that but I can see this could be an issue in some cases. Maybe the cloud software companies will have to come up with a way of allowing read-only access to restricted time periods.

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By nrw
17th Jul 2019 08:14

On a related note, it would be helpful if Xero provided the option to download all files (attachments) between two dates.

This would help with information requests from HMRC, and enable companies to backup / export / move their data elsewhere.

Currently if you rely on Xero as the single source of truth for all files (attachments) then it's tricky to leave Xero and you are trusting Xero not to screw it up.

There are lots of discussions / feature requests on the Xero forums about this.

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to nrw
17th Jul 2019 08:28

I’ve just been looking at this - latest comment from Xero I could find was in Nov 18 when they said “it’s not planned for the next 12 months”. Why would they - it’d make it easier to move away from them.

Why though, hasn’t a 3rd party created an app to do this?

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By nrw
to atleastisoundknowledgable...
17th Jul 2019 08:43

Yes, there's a big debate about that - however responsible software / SaaS providers will retain customers to by delivering great product than by locking them in.

Mass file-downloading is a feature that is needed for multiple purposes, including third party information requests - not just for abandoning Xero. Withholding it also degrades the user experience - many companies will not use Xero as their master repository for files as a result of not being able to easily extract them / back them up, which requires either using an alternate file store or duplicating the files in multiple places.

Beautiful software = retained users, that's the general mindset in today's B2B SaaS world rather than the legacy mindset of 'lock them in for years and watch them cry'.

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