MTD: Xero launches complimentary tools for accountants and their clients
With a week to go before one of the biggest changes to the UK’s tax system, Xero goes live with free, fully-integrated functions for Making Tax Digital-ready products.
Xero, the cloud accounting platform has today announced that its Making Tax Digital for VAT (MTD) functionality is live, a week ahead of the biggest change in the UK’s tax system in a generation. It will be available in all Xero plans that support VAT - at no extra cost.
The initiative is designed to make sure the UK tax system is effective, efficient and easier for taxpayers. The first stage of Making Tax Digital will see VAT registered businesses with a taxable turnover above the £85k VAT threshold keeping their accounts on a digital programme and submitting their VAT returns using a compliant software provider.
Xero has worked closely with HMRC for over three years, conducting several pilot tests, and gathering feedback from business owners and financial advisors. Xero’s new functionality has gone live today in advance of the day Making Tax Digital kicks off (1 April).
The suite of features will be complimentary as part of Xero plan that supports VAT, with no upgrade or additional fees required, and will allow accountants to submit their client’s MTD VAT return securely and in real-time to HMRC.
Damon Anderson, Director of Partner and Product at Xero, said: “We have worked closely with HMRC and listened to feedback from accountants and small business owners to create easy-to-use functions that will take the stress out of compliance. We’re proud to have launched in advance of the deadline to ensure all advisors and their clients have an opportunity to migrate clients before the official start date, and test out the new solution.”
Cheryl Price, CH Accounting, said: “Xero’s new solution makes compliance a breeze both for us as accountants and advisors, and for our clients. The ability to submit VAT returns to HMRC in real- time will mean that tax reports will be more accurate and less time consuming. The launch this week means we can ensure our clients are ready in good time, without any last minute hassle.”
Anne-Marie Simpson, founder of Simpsons Bar in Sutton Coldfield, said: “When we first heard about this new legislation, we were a bit worried about the process. Xero’s new solution for Making Tax Digital makes preparing for the change so simple. Using their cloud accounting software has given us a lot of time back to focus on other areas of the business.”
On top of ensuring total compliance, Xero’s suite of MTD-ready products feature a range of built-in functionalities saving accountants and their clients precious VAT accounting time. According to Xero research, accountants using cloud software save up to 117.5 hours a year on average (15 days) by eliminating time spent on administrative tasks, compared to paper based firms.
Xero’s MTD-ready platform will allow clients to continue using spreadsheets to calculate VAT and keep digital records. Bridging software will then allow them to upload VAT figures directly from the spreadsheet onto the Xero platform. From here, accountants can submit MTD VAT returns securely and in real-time to HMRC.
Xero have also added some extra useful functionalities:
- Knowing which VAT returns are due
- Keeping a history of the VAT returns that have been filed
- Calculating how much VAT is due
- Identifying the method of payment
- Posting VAT returns in real time
How will it work?
- Users must sign up to MTD for VAT with HMRC – it’s not possible to submit MTD VAT returns without doing this first
- Next, you’ll be asked if you wish to enable the MTD VAT return functionality in Xero (this message will appear when you open the VAT return section of Xero)
- Those that have signed up with HMRC need to enable the MTD VAT return function in Xero. Those that haven’t should continue to file non MTD VAT returns
Those clients who are not required to be compliant just yet have the option to turn on the MTD functionality later. For accountancy practices that use bespoke software that isn’t compliant with MTD for VAT, Xero is also offering a bridging software solution.
To ensure all customers are set-up for the new digital tax rules, Xero is hosting a series of live webinars for partners and businesses starting from 21 March to 18 June 2019.
For more information on the MTD for VAT features, register here to hear from Xero MTD product experts.