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Myths about HMRC’s powers

Myths about HMRC’s powers means it often overreaches during inspections.

HMRC can open documents that are visible but cannot search for them

Common myths businesses have about the extent of HMRC’s powers during an inspection means it is often able to overreach. These myths need to be debunked to avoid HMRC finding evidence that it should not have been allowed to. HMRC uses inspections as means to gather the evidence needed for its investigations.

HMRC will look to push the limits of its powers and inspectors will often use ‘force of personality’ to get what they want. It is therefore important that businesses are aware of the limits on HMRC’s powers; this includes:

1. Myth: HMRC can search for documents during an inspection 
When making an inspection, HMRC can touch and open documents that are visible but cannot actually search for something that is not visible. The broad rule that businesses need to know is “inspect is by eye and search is by hand”.

HMRC also cannot copy documents, remove documents or enter vehicles on the premises.

2. Myth: HMRC can inspect any document it wants
Certain documents cannot be inspected; for example, this includes documents that are older than six years, documents with legal privilege and tax advice documents.

3. Myth: HMRC can enter the premises when making an unannounced visit 
HMRC cannot make a forced entry and entry can be refused. If this happens, then HMRC must withdraw immediately. It is worth bearing in mind that this could be fine if a tribunal rules that entry should have been allowed, although this is unlikely. However, HMRC can make a forced entry when conducting a raid.

4. Myth: HMRC can require a business to add up sales revenues
During an inspection, HMRC can inspect assets on the premises which includes cash. However, HMRC has no power to require a business to ‘cash up’ during an inspection – this means adding up the cash generated during a trading period.

If HMRC decides to visit a business and do an inspection, there are steps management can take to reduce its impact. For example: inviting inspectors into a private room away from staff and documents; check the inspection notice has been signed by an authorized officer; and call their accountant immediately.

HMRC will look to push the envelope where it can so it’s crucial businesses are aware of their rights.

These myths means that businesses could find themselves handing over documents and assets that they didn’t need to do. This can result in problems if HMRC then uses what it finds to launch a full blown investigation.

Businesses should seriously consider our Fee Protection to cover the significant costs of advisor during these lengthy investigations.

Opening a UK business bank account as a non resident

There are an increasing number of foreigners opening companies in the UK. The majority of formations agents receive questions regarding the opening of a bank account all the time. The brutal truth is that although you need a limited number of documents to form a limited company, opening up a bank account can be difficult.

Banks tend to be far more conservative and they commonly reject applications from overseas residents. This article is going to show you what you need to do to open a bank account as a foreigner.

You Don’t Need a UK Bank Account

One of the misconceptions people have about forming a new company online is that they need a UK bank account to operate. In many countries, it’s necessary to open an account in order to trade. The UK allows you to use your account from abroad, as long as you make it clear that you are using a foreign bank account.

But it’s always better to have a UK bank account because it makes it easy to trade. Imagine the difficulties of trying to make overseas transactions all the time. It’s a hassle you don’t need when opening a company.

Do You Need to Live in the UK?

No, it’s not necessary to live in the UK in order to open a bank account. It’s wise to acquire UK residency before applying for one, though. Most banks won’t entertain an application unless you have UK residency. This is due to concerns over fraud and the additional administration costs incurred by them.

registered office address isn’t enough for most banks. You need to prove that you have residency and you need a home address.

What Options Do You Have for Business Bank Accounts?

The following information was correct as of this writing. The bank account opening process is the same for practically all banks. You will have to submit both personal and company information. Luckily, UK banks have a step-by-step process you can follow, and you can always have your agent handle most of the process for you.

A face-to-face interview is always required, and you will have to submit suitable identification, such as a passport or UK driver’s licence. The following banks have different conditions regarding non-nationals opening business bank accounts.

HSBC – Non-resident directors can open an account, but the owners of the company have to visit the UK and present a photographic ID, along with proof of address. They will also have to sign a bank mandate.

Lloyds Bank – Lloyds offers business bank accounts for non-residents, but only if one director lives in the UK. This UK resident has to visit the bank in person.

Barclays – There are no stipulations for opening international bank accounts with Barclays. But international accounts must begin from their branch in the Isle of Man. You will still have the same benefits as onshore account holders, but your account will be classified as offshore.

A Barclays account does demand that you have to place £25,000 into that account within the first month of opening it. Sometimes they do waive the requirement if you include a covering letter in your application, though.

What is the Situation Like on the Ground?

The way to ensure that you get your application accepted is to look at the situation from the point of view of the banks. You have to assume that they are always looking at the potential for fraud. An offer to leave a large deposit in the account will help them to believe that you are serious.

If you can prove that you have an address in the UK, this is another plus point in your favour. Multiple directors and shareholders is another sign of trustworthiness because they are not relying on one single person to deal with them. If something goes wrong, they have multiple points of contact.

In general, the process of opening a business bank account in the UK isn’t too hazardous. It can take a few weeks to open, so it’s best to get this out of the way before you formally start trading.

What are the biggest problems you have experienced when it comes to trying to open up a business bank account in the UK?

Xero VS QuickBooks Online

Thinking of a cloud accounting system for your business finances but not sure which one — here’s the ultimate review!

With Making Tax Digital (MTD) approaching and with HMRC insisting that small business, many of whom currently use spreadsheets, to move to cloud accounting systems we thought we’d compare the 2 most popular…

Xero vs Quickbooks Online

Developed in 2004, QuickBooks Online beat Xero to the accounting scene by two years. With advanced accounting features, beautiful invoicing, 400+ integrations, it’s easy to see why the software is so renowned.

Xero is a robust accounting solution that rivals QuickBooks in terms of capability and popularity. It’s been around since 2006 and offers fully featured mobile apps, amazing customer service, access for unlimited users, and an impressive feature selection.

Summary Table

Accounting

Winner: Tie

Both Xero and QuickBooks Online offer strong accounting. Each uses double-entry accounting and supports cash-basis and accrual accounting. In addition, each software has strong accounting features including bank reconciliation, fixed asset management, a chart of accounts, and plenty of accounting reports.

Features

Winner: Xero

QuickBooks Online and Xero offer very similar features. In some areas, like invoicing, project management, QuickBooks Online far exceeds Xero (especially since Xero has no project management or lending). In other places, like contact management, Xero provides the better feature. So how do we decide who is better?

In the end, it all comes down to accessibility. QuickBooks Online offers many great features — project management, budgeting, inventory, etc. — but there’s a catch. These features are limited to the more expensive plans. Xero doesn’t limit features by plan, making it a more robust and realistic solution for many users, which is why we gave it the win for this section.

Pricing

Winner: Tie

For some businesses, QuickBooks Online is a much more affordable option. Xero’s smallest plan only gives customers 5 invoices and 20 transactions, which renders this plan useless to many small business owners.

For medium to large businesses, Xero is the better choice. Xero offers payroll at no additional cost and supports unlimited users for every plan. QuickBooks Online doesn’t even come close in this regard.

This category is a draw. The real winner will depend entirely on your business size and needs.

Hardware & Software Requirements

Winner: Xero

As cloud-based software, QuickBooks Online works with nearly any device so long as you have internet access and are using one of the following browsers:

  • Google Chrome
  • Mozilla Firefox
  • Internet Explorer 10+
  • Safari 6.1+

Xero is also cloud-based; it’s compatible with nearly any internet-enabled device so long as you are using one of these browsers:

  • Google Chrome
  • Internet Explorer 11
  • Microsoft Edge
  • Mozilla Firefox
  • Safari 8+

Both QuickBooks Online and Xero offer mobile apps for Android and iPhone.

The only reason Xero takes the cake in this category is that you can use Xero with Linux, a capability QuickBooks Online currently doesn’t offer.

Users & Permissions

Winner: Xero

Xero offers unlimited users for all five of its pricing plans. The company also provides some of the strongest user permissions in cloud accounting. QuickBooks Online only supports one, three, or five users depending on your pricing plan (you can add up to twenty-five users total, but the cost adds up fast).

In the end, how can you beat unlimited users?

Ease Of Use

Winner: Tie

QuickBooks Online used to be the clear winner here, but the company has recently made changes to the UI, leaving the software difficult to navigate (read more about this in our complete QuickBooks Online review).

That said, Xero is only easy to use once you get to know the software. There is a steep learning curve and setup can be quite intensive. Xero offers plenty of support tools to get over this learning curve (which is more than QuickBooks Online can say). Because of QuickBooks Online’s recent downgrade and Xero’s steep learning curve, the programs are tied in this category.

If you end up choosing Xero, check out our free How To Set Up Your Xero Account guide; it will help you get started and optimize your Xero account.

Mobile Apps

Winner: QuickBooks Online

While there are a few complaints about QuickBooks Online’s mobile apps, most users find the apps incredibly helpful and easy to use. The apps receive 4.2/5 stars on iTunes and 4.3/5 stars on Google Play Store.

One of the biggest complaints about Xero is that their mobile apps are lacking key features and are ridden with bugs and crashes. It’s easy to see the winner in this section.

Customer Service & Support

Winner: Xero

Xero has the best customer service by far. In my experience, Xero representatives are well-informed and quick to respond to customers. The company also offers ample online resources, including a comprehensive help center, an in-software help button, a community forum, and lots of business and accounting guides.

While QuickBooks Online has been attempting to remedy their issues with poor customer support, the company still has a long way to go. Response times are slow and representatives are often uninformed. On the plus side, QuickBooks Online does provide a contact phone number (Xero does not — a fact quite a few users have complained about), but the phone support is not enough to beat out Xero.

Negative Reviews & Complaints

Winner: QuickBooks Online

This is one category QuickBooks Online should not want to win, and yet here they are. QuickBooks Online has received many user complaints regarding poor customer service, bugs, limited mobile apps, and even unauthorized charges.

Xero, on the other hand, has received very few customer complaints (although, this could be because it has half as many users as QuickBooks Online and hasn’t been around as long). The software is well-loved by most of its users and receives higher ratings across popular customer reviews sites.

Positive Reviews & Testimonials

Winner: Xero

While QuickBooks Online gets more positive reviews in terms of numbers, Xero receives a higher percentage of positive to negative reviews, which is why we’ve given it the victory in this section. Xero has earned 4.4/5 stars on GetApp and 4.3/5 stars on G2crowd (on this same site, QuickBooks Online only receives 3.1/5 stars).

Integrations

Winner: Xero

Xero has over 500 integrations, while QuickBooks Online comes in with over 400 integrations. Xero outnumbers QuickBooks Online here, but let’s be honest: once a company hits the couple hundred integrations mark, what more could you ask for? Both of these companies are the top accounting software companies when it comes to integrations, so you can’t go wrong with either choice.

Security

Winner: Xero

Ordinarily, this section results in a tie, but Xero has set itself apart in terms of security.

Both QuickBooks Online and Xero use data encryption, redundancy, and physical security measures at their prospective data centers. However, Xero boasts an unheard-of 99.97% uptime and has one of the strongest security reputations in the cloud accounting world. Of course, QuickBooks has one of the other strongest reputations in the accounting world, so, again, you really can’t go wrong with either option in this regard.

And The Overall Winner Is…

QuickBooks Online put up a very good fight, but in the end, Xero edges out the competition in a few key areas. Xero offers accessible features, better customer service, and more positive reviews. In this comparison, the people truly have spoken, and Xero is the winner.

Xero the Best Accounting Software For Larger Businesses. If you are looking for strong accounting capabilities, Xero won’t let you down. It’s important to note that there is a steep learning curve with this software, so if you’re not up for the challenge, QuickBooks Online might be a better choice.

Although QuickBooks Online didn’t win this one, it is particularly ideal for small businesses. If your company relies on invoicing, QuickBooks Online’s invoicing capabilities are far beyond anything Xero can offer. And if you need a project management feature, QuickBooks Online is also the way to go. Who knows?

If you want a full guide in how to set Xero up- go to our of our new chatbot 🤖, Claire

Big data accounting – the predictive accountant

I hear many owners say "My business too small for big data”. Ironically, the size of the data is the least important aspect for business improving decision-making.

Business owners, irrespective of the size of their organisation, are making decisions on big data. Businesses of all sizes generate a significant amount of non-financial unstructured information For example, GPS position data from mobile phones, temperatures from sensors, free-form text in questionnaires, website customer interactions, social media conversations and video from security cameras.

The hallmark of big data

The hallmark signature of this big data in this context is that it represents the non-financial information (NFI) occurring in between transactions. Since the Renaissance, humans have been diligently capturing and recording financial transactions using double entry bookkeeping and accounting systems, The NFI has not been collected or utilised.

The representation of the current business is transactions (sales and operational indicators), but the future situation depends on human empathy and relationships, represented by the likes of user-generated content regarding the use of brand products (eg via Twitter), ratings (eg via TrustPilot), reviews (eg TripAdvisor), one to one conversions, distress signals from customers (via Customer Service Video, Voice or Text analysis) and geolocation of customer activities (eg via Mobile Phone GPS).

..and that's before you consider the Internet of Things and all the physical sensor information available

But how does this impact the financial state of affairs? Consider a hotelier. She pays attention to rankings changes on TripAdvisor, as this impacts her future revenue. She could leverage that big data to anticipate a change in demand for rooms and take action. Rather than waiting for financial statements from her accountant before taking action on the revenue discrepancy.

The democratisation of data

Increasingly, this phenomenon of using data held outside of businesses to provide predictive capability in advance of actual events or publication of financials represent the democratisation of data.

The democratisation allows Cloud Accounting to gain access to data to help you make data-driven business improvement decisions. By free we mean very little or literally no investment for the data.

Big data for competitive advantage

Chartered accountants can leverage big data to gain competitive advantage over other professionals.  At Cloud Accounting NI, we integrate big data into the financial performance measures we regularly provide to businesses.

For example, a website of any business is a natural starting point. A decrease in online customer visits compared to a previous period is a potential indicator of a future drop in sales. Google Analytics reporting helps provide visibility into sales well before a sales transaction entry is recorded. Or indeed lost to a competitor.

We have seen NFI (non financial information) and financial accounting data work together to better benefit businesses.As accountants we provide a more holistic service for businesses to provide predictive capability.

Please get in touch with us if you feel you can benefit from predicting the future.

CLOUD ACCOUNTING LLP

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