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.
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…
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.
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.
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.
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
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:
Internet Explorer 10+
Xero is also cloud-based; it’s compatible with nearly any internet-enabled device so long as you are using one of these browsers:
Internet Explorer 11
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
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
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.
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
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
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).
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.
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
You may not want to appoint an accountant to do your accounts but maybe you need someone to help you get up and running on FreeAgent; checking that you set everything up correctly as well as ensuring that you know what to do and how to do it going forward.
This is especially useful if you’ve been trading for some time and need to set up your opening position in FreeAgent and your VAT accounting.
That’s why we come up with our Getting Started service.
Our Getting Started service is great for clients who are new to FreeAgent or new to business as well as an ideal solution for those starting out in the contracting or freelancing world.
It’s a cost effective solution for those who are willing to listen & learn so that they can develop the capabilities needed to do their own bookkeeping and keep their accounts going forward.
We provide you with hand holding up front to get you on track with the confidence that you need to know that you are doing the right thing.
To read more about what’s included in this service CLICK HERE.
HMRC Business Record Checks programme is designed to ensure that small business owners are keeping their records up to date. HMRC wants business owners to pay the right amount of tax at the right time.
HMRC Business Record Checks
Don’t put off the paperwork - keep your books up to date
The most important thing you can do is to make sure that your business books are updated regularly. This isn’t just because HMRC require you to, but it’s also essential to know where you are in your business. When your records are up to date, not only can you pick up on crucial information quickly. You can also easily respond to any HMRC enquiries without the stress of searching for scraps of paper!
To make sure your books are up to date, ensure that:
your bank account balance matches the balance in your accounts.
you have issued and kept a copy of invoices for all money received.
you have copies of receipts for all costs in your business. Remember that in most cases HMRC will accept scanned receipts instead of hard copies!
Online Cloud Accounting systems can really make the above three processes much more efficient and easy to handle.
Avoid accounting errors that trigger an automated HMRC Business Record checks
Unusual activity in your tax records or accounts could flag you up for HMRC review.
To keep HMRC’s systems happy, it’s important to keep your records up to date and as error-free as possible. If you’ve had a problem lurking in your books that you’ve been vainly hoping would just go away, now’s the time to ask your accountant for guidance or contact HMRC to sort it out. To keep the errors at bay and save time, try automating some of your day-to-day bookkeeping work..
File your tax and VAT returns on time
HMRC Business Record Checks are more likely to happen when your tax filings late. Making sure you’re staying on top of your tax obligations can help.
When HMRC is happy, you’re happy too!
One of the best parts about staying in HMRC’s good graces is that your business will benefit from tidy, up-to-date records. You’ll not only be ready if HMRC has an enquiry, but you’ll also know how your business is doing on a day-to-day basis.Otherwise you're waiting until the end of the month, quarter, or even tax year to find out about any problems.
Do you sell digital services such as: music or software downloads, e-books or online videos? If so, do you know where your customers are, and whether they are businesses or individuals?When you sell digital services across international borders you will have to collect information about your customers to determine if they are businesses or not, and […]
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