COVER STORY


ways. HMRC has signed up Xero as a facilitator to the ‘Making Tax Digital’ programme, which is making businesses with a taxable turnover above the VAT threshold comply with HMRC’s demands to use certain software to submit their tax returns. This is a big shift for SME businesses, but one which must be embraced and made the most of. Automation is also a way to get


employees on board by showing them what benefits they can personally reap if the business adopts this new technology. People’s jobs will become less filled with individual manual tasks and far more focused on meaningful work. Damon and Sarah talk about the


strategic reasons behind their partnership and tackle the tough questions surrounding MTD.


Zoya: Sarah, which of your businesses has signed up to Xero? Sarah: The Craft Gin Club is one of my companies that uses Xero’s solutions. Craft Gin Club is a subscription service


for gin lovers. Every month, members receive a surprise Gin of the Month box through the post. Each box contains a full-sized bottle of very special craft gin – including brand new, one-off or specially imported spirits. Jon Hulme and John Burke, business


school friends who met while studying in Madrid, founded Craft Gin Club in January 2015 with the mission to reinvent the way gin lovers discover and enjoy new gins, all while supporting amazing craft producers. In the summer of 2016, Jon and John


W


appeared on BBC Dragons’ Den, attracting offers from four Dragons before winning my investment; I now work closely with the company as a member of its board.


ith HMRC’s new VAT tax rules that spurred into effect its Making Tax Digital on 1st


April 2019, this compulsory directive has brought pressure to bear on 1.1 million businesses, overwhelmed by regulation and limited by the lack of financial acumen to meet the target. New research* has found that two-thirds of British small firms admit to having less than one day’s corporate financial experience or business education prior to the launch of their business. This lack of financial know-how has caused growth to be “stunted”, as well as two-thirds of SMEs being hit by tax return fines totalling £1.3 billion. Small businesses have nor the time nor relish accounting and are unused to investing in tech innovation to bolster their booking-keeping efforts.


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GETTING BUSINESS OWNERS’ AND EMPLOYEES’ BUY-IN HAS BEEN ONE OF THE BIGGEST CHALLENGES THAT EVEN ACCOUNTING FIRMS MUST FACE IN ORDER TO INTEGRATE INTELLIGENT ACCOUNTING (IA)


So it seems getting business owners’


and employees’ buy-in has been one of the biggest challenges that even accounting firms must face in order to integrate Intelligent Accounting (IA). Yet tech is changing the sector in many


Zoya: What tax problems is Xero currently solving for SMEs? Damon: From April 1st 2019, the majority of UK businesses above the VAT threshold of £85k need to file their tax digitally using HMRC-compatible cloud accounting software, under new legislation called Making Tax Digital. This will initially affect 1.1 million UK SMBs. This legislation is designed to remedy costly filing errors and enable HMRC to digitally track individual invoices. It signals the UK’s aspirations for a digital Britain in which businesses can work together, from scalable, interactive cloud platforms. Xero is an HMRC compatible accounting


platform. This means that small businesses filing their tax through Xero can be confident their tax filing will be compliant.


SME MAGAZINE 15


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