A new generation of practices is emerging to cater for small businesses in the digital tax era. Valme Claro talks to TaxGo, one of the pacesetters in this movement.
TaxGo was founded in 2016 by directors of Dennis & Turnbull and Tayabali Tomlin as a low-cost digital service for entrepreneurs and microbusinesses offering all the services of a regular accountant for £20 a month.
With fees set a third of the usual rate that most accountants charge, the firm is promising “21st century accounting at 1950s prices”. But there’s no escaping the underlying motivation here, as the service has been specifically designed to cater for the requirements of HMRC’s Making Tax Digital (MTD) regime.
Other firms such as contractor specialist Umbrella Accountants and UK200 member Rees Russell are also moving into this market. And AccountingWEB expects to see more representatives of this new wave when the Practice Excellence Award entries for New Firm of the Year are collated. To find out more about how this new approach is evolving, we talked to TaxGo founder Carl Reader.
Along with Aynsley Damery, the chief executive officer at Tayabali Tomlin, Reader could see the growing gap for microbusinesses faced with a choice between filling out their own tax returns or paying an average of £60 per month to have their tax affairs handled by an accountant.
“Eighty per cent of practices are currently chasing the 20% of businesses that want or need added value services, leaving the vast majority of small businesses either as second class citizens, or overcharged,” said Reader.
“Many of these microbusinesses are not using online tools, and have no one to point them in the right direction with regards to tax legislation.”
Under MTD businesses will need to use commercial accounting software to maintain their records and to update HMRC. According to Reader, not using an accountant will become increasingly risky under MTD, which will require businesses and self-assessment-registered individuals to file quarterly tax reports.
“It gives the business potentially five opportunities per year to make an incorrect filing rather than just one,” he said. “We are clearly aiming at those businesses who want to stay compliant and also receive some level of assurance.”
Technology such as QuickBooks Online and plug-in applications has paved the way to automate the bookkeeping so TaxGo can offer this level of service at reduced prices.
“We’ve built a full management system from scratch” said Reader. “The tech helps us reduce human input, but is only part of what we have done here. We’ve also fully re-engineered the process of preparing accounts and tax returns, stripping out all superfluous tasks and minimising the work that our team has to perform.”