Staff Writer AccountingWEB
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Xero Tax makes its live debut

After being announced at Xerocon 2019, Xero Tax has finally reached the cloud provider’s platform. Xero’s Damon Anderson sets out the key features of the new tax app and answers some questions from AccountingWEB users.

14th Apr 2020
Staff Writer AccountingWEB
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Photo of presentation at Xerocon 2019.

Since Xerocon’s big 2019 winter announcement that Xero Tax corporation tax and accounts production would hit the platform in March 2020, Xero users have been waiting in anticipation. At the end of March, Xero Tax finally went live, generating excitement and concern in equal proportions.

Xero Tax is an accounts production and tax filing solution allowing accountants and bookkeepers to prepare and file statutory accounts and corporation tax returns directly from the accounting platform. The module connects directly with a clients’ financial data in Xero, Companies House and HMRC to provide an end-to-end workflow.

According to Xero director of operations Damon Anderson, corporation tax and accounts production for micro entities (FRS105) and small companies (FRS1021A - abridged) make up the first module to be launched. The system “provides a deep, end-to-end integration with the core Xero product [which reduces] human touchpoints and [removes] the need to open balance issues or re-enter the data,” he said.

Client view in Xero Tax 

Xero Tax dashboard upon completion of accounts and tax return filed and accepted.

Personal tax, trusts and partnerships

AccountingWEB users such as FirstTab and bettybobbymeggie raised concerns over Xero Tax’s lack of personal tax, trusts or partnerships. When asked about these features, Anderson confirmed that Xero Tax was still in its early stages and responded: “Many customers have asked us about personal tax [and] if they can complete for their clients. Xero Tax doesn’t currently cover personal tax, trusts or partnerships [but these] are modules we will be rolling out in the future.

“We are developing a self-assessment tax module, ready for general release to our UK accounting and bookkeeping partners for the tax year ending 2021. We are also committed to providing a solution for Making Tax Digital for Income Tax.” 

Anderson added that customers had also been asking about accounts production for sole traders, charities and partnerships. “We’ll continue to develop our accounts production tools in these areas too,” he said.

Xero pricing concerns

Xero Tax is available free within Xero’s partner programme, but questions have been raised on AccountingWEB that the new functionality might push Xero’s prices up. Anderson responded: “Xero Tax won’t push Xero’s prices up. We’ve worked hard to ensure it is a feature which is included in the partner programme as standard.

“Like many businesses, from time to time we need to assess the amount we charge our customers so that we can make the right investments in research and development to keep improving the platform as well as reflecting changes to inflation.”  

AccountingWEB user reactions

Although many customers are still trying out Xero Tax for the first time, several users including johnt27 have shared their reviews, “The integration is slick and works nicely, although the review/approval features needed some improvement,” the AccountingWEB member wrote, added that overall Xero Tax “has potential to replace incumbent software as additional features are added”.

Several other users offered less favorable reactions to the user interface. In Any Answers indomitable complained that Xero Tax “looks and feels really clunky, [I] couldn't find things easily, couldn’t edit easily, very limited, no personal tax.” But, he added, “Wait a year or two and it may get better.”

Supporting Xero customers through crisis

When asked what measures Xero has put in place to support customers in distress, Anderson confirmed that a dedicated response team had been set up by Xero to help guide them through it. “We are working hard to ensure that Xero stays strong, and that our customers have access to their financial information at any time,” he said.

Xero has created a Business Continuity Hub, pinpointing key information from the government, in addition to webinars and guides such as how to run your business remotely and how to keep track of cashflow. The platform has also reduced its standard payment terms for suppliers to 10 days.

Replies (7)

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By ireallyshouldknowthisbut
14th Apr 2020 14:52

I wish they would just make Xero better and keep the fees down, not keep on adding half arsed stuff

We still have the "not very good" PAYE module knocking about
Reports are a mess with two different types called the same thing (!)
General running speed is not great.
Branching out into "tax n accounts " production seems foolish.

I don't see why software companies always thing they can do everything just because they have deep pockets for development. Do one thing well would be a mantra well worth repeating.

This seem to me like a "and we want £500 a year subs to be an agent" due to all this lovely software you dont use type approach to me.

Thanks (4)
Replying to ireallyshouldknowthisbut:
By philaccountant
14th Apr 2020 15:06

Completely agree. Xero's forums have a feature request section and items of basic functionality have been on there for years without being implemented.

For example, you still cannot to this day run a supplier statement in Xero. Just google "Xero supplier statement", they don't have one!

What they did instead was to remove the dates features were requested on the forum so that you can't tell how long ago these requests were made. Problem solved.

Thanks (4)
By carnmores
14th Apr 2020 17:10

quickbooks and other packages connect with Taxfiler and work seamlessly. is this sort of integration not a better way to go?

Thanks (1)
Replying to carnmores:
By ireallyshouldknowthisbut
14th Apr 2020 18:01

It seems they (and taxcalc have gone the same way) would rather than 15 sub par products connected to their one decent core product, then one 'best of breed' with seamless integration.

I really don't get it as a business plan. Integration to Xero from any final accountant package (even into excel) is no big deal. You might at worse have to post a few final journals in Xero and again in the final accounts if adjusted post import.

This seems more about end users filing their own accounts without an accountant as all the buttons are automated. That will end well.....

Thanks (1)
By n.i.atanasov
15th Apr 2020 10:55

I tried it in parallel with Taxfiler for 1 client's accounts.
For a first release and possibly a rushed one I think it is not bad. All the numbers map quite well and the capital allowances are dealt with nicely. Less manual input vs the Xero - Taxfiler integration.
That said there were one or two bugs (date on the accountants report was 1 month off).  The wording on the BS was not really up to scratch. I could not tweak it.  My biggest gripe was the lack of stand alone tax computation report. In addition the review process of changes and report generation was slow.
Overall I think it might turn out quite good, but I will  be very reluctant to move my production on to it knowing that at any point they might decide to charge me per client...

Thanks (1)
Replying to n.i.atanasov:
By carnmores
15th Apr 2020 13:13

Your last sentence says it all

Thanks (1)
By indomitable
16th Apr 2020 13:03

Absolutely agree with many comments here

why oh why do software companies think they can do everything instead of concentrating on getting their core product better.

Xero - a list of things they bought out that in my opinion are not good enough for a professional practice.

Payroll - when I looked over a year ago - no P11d's, No CIS, VERY poor reporting, maybe functional but not good enough. Maybe its improved but I would be very surprised if it stacked up well against moneysoft or brightpay
Practice management- can't even remember what its called now but even though I get it for free cannot use it because it it woefully poor
New expenses module- complete rubbish - the old system that was integrated into the main Xero they had was far better and free. There are many good apps for expenses that are far better value than Xero's attemept at an expense module
Tax and stats - First look at this cannot use, no personal tax, can't edit the accounts, doesn't feel easy to use

Why don't XERO just stick to perfecting their bookkeeping software!

Thanks (1)