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Xero Tax set to hit the UK market in March 2020

In a raft of product news at Xerocon 2019, perhaps the most notable was the cloud provider’s announcement that it will roll out its corporation tax and accounts production modules in March 2020.

14th Nov 2019
Editor AccountingWEB
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Xerocon 2019 Anna Curzon
Xero

Day one of Xerocon 2019 kicked off with news that the Xero Tax corporation tax and accounts production module will be released in March 2020.

The move marks a fundamental, much-trailed shift away from the company’s cloud accounting software roots, and was received with cautious optimism by the Xero fan base in attendance at ExCeL London.

Built on the functionality of Instafile, a small software business acquired by Xero in 2018, accountants will have single login interaction between core Xero data and tax and year-end accounts compliance and will be able to access a fully integrated tax preparation workflow on the Xero platform.

In her keynote at the Docklands-based event, chief product officer Anna Curzon labelled the move a “fundamental reinvention” of compliance in the UK.

“You can use Xero login details end to end, with statutory filings made entirely from Xero,” said Curzon. “Any adjustments can be made from one version of the truth, which will save a huge amount of time.”

Xero Tax features announced at the ExCeL include single sign-on with Xero, removing the need for uploading and downloading between accounts software and accounts production software, and fixed asset register integration.

Speaking to AccountingWEB at the event, Curzon announced that the first tranche, including corporation tax and accounts production, will be released in March 2020, but users can join beta testing for micro-entities and small business right now.

Xero’s director of operations Damon Anderson added that the firm was “live and running” on corporation tax and are also fully released on FRS 105 micro-entity filings and FRS 102 1A small business filings.

The new tool also offers e-signing and custom document styling, integration with companies house, and users can post tax directly back into Xero.

According to Curzon, users can check for common anomalies and service bookkeeping transactions from within the accounts production workflow. Accountants can also prepare final accounts from Xero data with automatic account classification and iXBRL tagging, and a multi-user review process allows advisers to pass work around their practice without leaving Xero tax.

Curzon announced that Xero Tax will be available free as part of a partner subscription in the UK. Xero partners at Xerocon can request early access to micro-entity filing and help beta-test small company filing ahead of its general release next year.

The road ahead

With Xero’s MTD for VAT solution up and running (with the odd hiccup along the way) and the corporation tax module due for release in March 2020, thoughts on the show floor strayed to other taxes.

While an update on personal tax was conspicuous by its absence in the announcements, speaking to AccountingWEB after her keynote Curzon said that it was in vendor’s future plans for the product. Also in development, according to the Xero site, are partnership tax, trusts and estates.

Speaking on the No Accounting for Taste podcast’s Xerocon special, Avery Martin director Glenn Martin was optimistic about the time and money-saving possibilities of the Xero Tax product.

However, he added that until the successful testing and rollout of the product, many practice owners may choose to keep their powder dry and stick with their existing providers.

With Making Tax Digital for self assessment currently due to arrive in 2021 (at the earliest), this is likely to prove a key staging post for Xero’s personal tax product.

While many of the announcements were for upcoming products, one tax-related feature mentioned at the show that is already available is a new view in Xero HQ of VAT requirements across accountants’ entire client portfolio.

Accountants have a real-time view of when clients’ MTD VAT returns are due, filing status and which clients are registered as Non-VAT. This has been built to allow users to track upcoming compliance requirements for all of their clients, instead of across different spreadsheets, task lists, emails, or individual client files.

Replies (23)

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By Charlie Carne
14th Nov 2019 11:09

I was interested in their announcement of the tie-in with TransferWise, allowing payments to suppliers to be made directly from within Xero. I'm not sure how TransferWise get the cash to fund the outbound payments* (perhaps by direct debit from the business' bank account or perhaps by a manual payment in advance) but this has huge ramifications. Assuming that they put multiple level approval permissions in place, this would allow the external accountant to set up (but not release) payments on behalf of the client (without requiring direct access to the client's bank account) and the client need merely log into Xero and approve it.

*"Customers start the process in Xero by submitting payment details, which are then sent to TransferWise. Once the customer has funded the payments from their bank account, TransferWise will process the payments to the suppliers’ bank accounts. To use the solution, you’ll need to set up a TransferWise account (or use your existing business profile account), which acts as a clearing account for the payments."

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Replying to charliecarne:
By Tom Herbert
14th Nov 2019 11:17

Morning Charlie. Thanks for this - story coming soon!

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By flightdeck
14th Nov 2019 12:15

ooo - that's quite scary

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bike
By FirstTab
14th Nov 2019 13:10

Rod Dury announced Xero final accounts a few years back. Despite my questions on this many times Xero, like our politicians, did not answer the question asked.

I will believe the announcement when I see the product. I do not trust Xero's announcements anymore.

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By SouthCoastAcc
14th Nov 2019 15:38

Not a massive fan of xero, will test it out when I can but I don't like to put all my eggs in one basket either.

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A Putey FACA
By Arthur Putey
14th Nov 2019 17:08

Yay! Just like Sage Online can do it right now, and also self employed and personal tax returns.

Like the sound of the Transferwise integration though.

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By Red Leader
14th Nov 2019 17:09

But will it be as good as Xero's payroll s/w?

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Replying to Red Leader:
By ireallyshouldknowthisbut
14th Nov 2019 17:22

Well quite.

Whilst integrated can certainly be useful, it is only good if it saves time overall.

CT is not that complex, but the "best of breed" programmes have a lot to contend with when it comes to losses CA's etc, if that is not good you are going to waste more time on that end than you save on a bit of cut'n'paste and duplicated journaling in Xero and on the desktop..

I tend to work on the desk in excel/cross referencing to Xero, directly posting all the changes as I go, then download the final TB to shove through our accounts prep. Admittedly this can mean some mapping to do, but surely you have to do that in Xero too.

It will however presumably suit the "look ma no hands" style practices who just sluice the data through to final accounts without much if any thought or analysis, plus allow punters to file more garbage with HMRC without us lot.

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Replying to ireallyshouldknowthisbut:
Chris M
By mr. mischief
15th Nov 2019 06:38

Oh well shareholders can just wait another few years for their Xero dividends then. As with payroll, it is trying to run before it has learnt to walk. Yet again.

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Chris M
By mr. mischief
15th Nov 2019 06:42

Xero market cap 5.8 billion. A staggering 18 times sales. No dividends ever paid in its 15 years or so of history.

If this were a similar tech. company in 1999, we would know with 95% probability how this story ends.

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Replying to mr. mischief:
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By flightdeck
15th Nov 2019 17:41

Well ... I'd take a difference stance to you on this. It's not that staggering in the tech space and Google (Alphabet), facebook, twitter are doing ok without paying a dividend. Apple didn't pay a dividend for many years. xero posted a half year profit this year (+ve free cash flow).

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Replying to flightdeck:
Chris M
By mr. mischief
17th Nov 2019 22:46

Mmm. With this company the devil is always in the details. See my numerous posts on this topic regarding Xero results. In the past there has in my view been a wide disconnect between the issues that management draw investors' attention to, and what sensible investors should be looking at.

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Replying to mr. mischief:
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By thestudyman
18th Nov 2019 07:48

mr. mischief wrote:

Mmm. With this company the devil is always in the details. See my numerous posts on this topic regarding Xero results. In the past there has in my view been a wide disconnect between the issues that management draw investors' attention to, and what sensible investors should be looking at.

I think there is a trend especially with tech companies and unicorn companies (big and small) that investors these days tend to look more at capital growth than dividends.

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Replying to mr. mischief:
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By flightdeck
19th Nov 2019 10:23

Is your issue with xero with xero themselves or a general dislike of the wider tech sector and their crazy valuations? I am not trying to challenge you here, just interested in what your specific beef with xero would be.

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Replying to flightdeck:
Chris M
By mr. mischief
28th Nov 2019 19:33

It's both. More generally numerous tech. companies on silly valuations crashed and burned in 2000 or so and this fed out into the wider economy. It seems to me, with trade wars and Brexit, a bit of tech stock crashings is all the world needs to trigger recesssion.

Some of my most successful investments over the years have been low or zero dividend payers. As an investor I look for companies run by people who tell it like it is in their annual reports. For high P/E low dividend companies this is even more important as they are not putting any bread directly on your table.

In my view, the Xero annual report is a masterpiece of misdirection, smoke and mirrors. You don't have to take my word for this. When their results come out you'll find plenty of shills eulogising the results on this site, who in my view have not read much further than page 2.

I can make 3 or 4 notes on a Xero report - clue I always start from the last page where the dead are more likely to be buried - and then as I get towards the front I am looking for comments by management tackling those key issues.

With Xero you are very lucky if just 1 of them gets mentioned, it's usually 0. I am out, not investible for me.

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Replying to mr. mischief:
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By flightdeck
28th Nov 2019 19:45

Ok cool. Sorry, I was reading in that you had issues with their product. I will take your word for their financials, I've never look at those at anything more than a google skim search level.

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Replying to flightdeck:
Chris M
By mr. mischief
01st Dec 2019 20:53

I have issues with the product as well. The payroll is very poor, with none of the reports I most use with other software products, to tie the trial balance numbers into what we 've been sending to HMRC.

I don't like the way it does VAT cash accounting either. Call me old school if you like, but if a company has a 30 September year-end and a September VAT quarter and pays VAT by direct debit, then if V is the 30 September VAT return amount, V should also be the control account balance.

Not V plus or minus all the cash accounting adjustments invoice by invoice.

I try to use Xero as little as possible, mainly because EVERY SINGLE Xero client I have had - admittedly only 5 - who do their own book-keeping and use me for the corporation tax is unable to get their Xero trial balance bank current account agree to their actual bank statement balance.

Having identified that issue, it's then clear that when I look into the expense accounts any number of "click and post" invoices have often been stuck in the wrong nominal account.

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Image PN
By Mr Hankey
15th Nov 2019 09:45

I enjoyed the Xerocon event and do see the benefits of having a linked bookkeeping and accounts production system.

However I'd rather have all clients within one accounts production software, I don't want two systems to learn, and two different formatting layouts. If Xero allowed the accounts production to produce accounts for non-Xero clients I would consider it, but if not then...nope.

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Replying to Mr Hankey:
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By flightdeck
15th Nov 2019 17:27

@Mr Hankey. I have a general question for you. Aren't clients presenting accountants with a bit of a fait accompli in that if you want to pick up a new client, you're going to have to embrace their bookkeeping package too? (I maybe missing your point though).

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By tanyajackson
15th Nov 2019 13:34

Like others have mentioned, it will only work if you can also do non Xero client tax returns.

Also, is this going to be available directly to the client? If so all of a sudden client's believe they can just file what's in Xero straight to HMRC and we all know how that will go. Accountant's are Xero's bread and butter (their words) and it wouldn't be the first time they made a blunder, like recently when they slashed the prices to the public by 50% whilst selling block discounted subscriptions to accountants to get client's onboard.

I'm scared to think what the price will be.

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Replying to tanyajackson:
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By flightdeck
15th Nov 2019 17:12

@tanyajackson. I had the same thought too - will end clients eventually get this functionality and if they do, where does that leave accountants?

I run payroll through xero and it works a treat and it has saved me quite a bit in bureau fees. (I am a big fan of xero).

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Replying to tanyajackson:
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By daniel_
18th Nov 2019 10:02

I had a chat with my Xero account manager about this and asked whether it would be available to business users or just accountants/xero partners.

She said that it would be available to business users too and they'd be able to prepare FRS102 S1A and FRS105 accounts and CT600, but seemed to suggest that it would mainly be marketed towards xero partners.

A bit concerning considering the nonsense accounts you occasionally see at Companies House.

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Replying to daniel_:
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By ashtron
18th Nov 2019 14:50

Hi Daniel, Xero Tax is only available for Xero accounting and bookkeeping partners on the Xero partner programme.

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