Bookkeeping cloud add-on developer Receipt Bank is the first out of the traps with an app catering for sole traders under the embryonic quarterly reporting regime proposed by HMRC.
Known as 1Tap Receipts, the new app is a stripped-down version of the current Receipt Bank expenses and data capture tool. 1Tap will be free to end users (within certain volume limits) and is designed to expand the pool of businesses connected to the underlying bookkeeping management platform.
According to Receipt Bank chief technology officer Michael Wood, 1Tap has been specifically designed to help UK traders cope with the demands of HMRC’s proposed making tax digital regime.
“Within six years everyone has got to be in cloud,” he said. “When we looked at making tax digital we wanted to release a product that helps the modern practices that have already done the hard work to adapt and expand.”
While Receipt Bank focuses on recruiting a new group of microbusiness users, it still hasn’t worked out a pricing model, Wood said. “Our aim is to share the upside with accountants, but we don’t yet know what the upside is.”
But after early demonstrations to accounting partners, he added, “There’s already a waiting list of accountants wanting to sign up.”
For the client, 1Tap streamlines expense capture to its bare essentials. You open the smartphone app and choose one of three options: Home, Camera or HMRC. If you can see the paper receipt on the screen, you just have to push the red shutter button and it starts winging it away to the automated Receipt Bank expense recognition system. One of the app’s neat features is that it will automatically assign the expense to a default category based on the supplier’s name.
On the app itself, the cumulative tax saved by claiming qualifying expenses is represented by a graphic on screen and there is an accompanying “I” information icon to advise the user on things like allowability. If they choose the HMRC option at the bottom of the screen, they will see a summary of their expenses presented as they would appear in the relevant SA 103 boxes.
The resulting data file will then be available within Receipt Bank for accountant partners to pick up and process through their systems to HMRC.
The key feature of 1Tap, according to Receipt Bank director Nick Bartlett is its simplicity, convenience and price. “In the era of MTD accountants said there’s a need for lightweight, low cost cloud tools. The toolset for sole traders has got to be so easy that there’s no need for training or on-boarding. And they’ve got to be so affordable that any sole trader can use them.”
The challenge facing accountancy firms serving sole traders is to deliver the quarterly submissions demanded by HMRC within a fee structure that won’t scare off sole traders.
“Receipt Bank is all about automating bookkeeping for the practice,” said Wood. “If we’re going to help practices automate that, you need to have one workflow for all clients. It’s inefficient to have multiple workflows.”
That means the back-end processes will need to be standardised whether the business is paying £3,000 for accounting services, or £150, he added.
“Receipt Bank has a very explicit aim to reduce the costs of deliver services to sole traders. It’s a difficult task to enable accountants to review and edit data in a way that is far quicker and cheaper than it is today, and we think we’ve achieved it,” said Wood.
It’s a big claim, but 1Tap catches the eye because it’s an early example of what tax reporting might look like after making tax digital. The actual workflows and specifications still haven’t emerged from HMRC, but Wood said part of the MTD plan is for third party software developers like Receipt Bank to design the processes that deliver the data HMRC wants.
“HMRC was always confident that free software could emerge,” Wood said.
There’s still a lot of engineering work to complete in the background, but Receipt Bank is positioning 1Tap as the front end of the MTD process. According to Wood, cloud-based general ledger systems and tax tools are likely to continue playing their traditional roles in the tax workflow. And so are accountants.
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