Our Investment in TaxScouts
(Almost) No one likes doing their taxes.
Thankfully, in the UK, personal income tax is “on autopilot” for a lot of people. But what about construction workers, professional freelancers (incl. gig-economy workers), landlords, high-earners (earn above £100k), or people who are entitled to some kind of tax relief or refund, such as investors on crowdfunding platforms? They really get to experience how cumbersome, manual, time-consuming and prone to error the process is.
In fact, taxpayers that need to perform their tax filings manually, face a trade-off; DIY or delegate to accountants. Should you focus on saving money now and waste time on the tedious task with the chance of getting fined later, or should you pay more upfront to hire an accountant for peace of mind? An accountant might cost from £250 upward of £400, an amount that some cannot afford or are simply not willing to pay. That is the problem that the team at TaxScouts is solving — preparing tax returns currently either sucks or is expensive!
62% of those needing to do their tax returns manually do it themselves. HMRC has created a set of guidelines along with a digital portal to improve the process of filing, but this has proven to be insufficient. Over the last tax season in the UK, 0.8m people missed the deadline for filing taxes which amounted to c. £1bn in late fines. A lot of money was left on the table as well; an estimated £1.3bn of unclaimed tax reliefs. We share the belief that both are problems that can be solved with automation and cooperation.
The team at TaxScouts capitalises on this opportunity by building software that demolishes taxpayers’ trade-off and automates the admin in tax preparation. With an existing HMRC integration and by plugging into other data sources, they can offer data aggregation and automation on self assessment, connecting you to a certified accountant for filing, all done reliably in up to 24hrs. For circumstances where integrations are not feasible or documents are still paper-based, such as invoices or dividend certificates, the mobile app allows you to upload or take a photo of them. Simplicity, automation, speed and convenience, all for £99.
And timing seems to be on their side:
- the proliferation of platforms, APIs and openness enable levels of automation through integrations that were previously not possible;
- an ever increasing amount of people experiencing non-standard and multiple income streams (incl. the rise of the gig economy) is expanding the market size;
- government support through HMRC’s ambition to become one of the most digitally advanced tax administrations in the world (incl. initiatives like Making Tax Digital), creates partnership opportunities.
Others’ have created simple digital portals and have failed before. It is quite a nuanced space after all with elements of seasonality, tight margins and a risk of falling into a “feature trap”. We believe TaxScouts has a unique approach and is best positioned to leverage the learnings to succeed:
- Seasonality: government initiatives are against a one-off filing and in support for a shift into an ongoing process. Create a relationship with the customer around staying on top of personal income tax, with ongoing VAS, including advice on eligibility for tax refunds.
- Tight margins: increase automation and offer VAS. Also focus on value offered to accountants who struggle with customer acquisition, onboarding and ongoing communication (cost up to £200 for new clients).
- Feature trap: assemble a product-first team that can execute fast and build a brand.
Be targeted, personalised and create strategic partnerships. Create shared value and save money for taxpayers, accountant and tax authorities.
What we are mostly psyched about, however, is to be working alongside an exceptional founding team. Three friends that have worked together in different capacities throughout their careers. Mart (Tram) as CEO who has held lead product roles at Intuit, MarketInvoice and Skype and was employee number 8 at TransferWise. Dan as CTO, former lead engineer at MarketInvoice and holds an MSc in Physics and Neural Networks from Cambridge. Kaupo as CDO, founder of Haiku, a leading design agency in Estonia with projects including product and design design work for TransferWise.
We are very excited to be backing the TaxScouts team, alongside our friends at Seedcamp, Finch Capital and a wide spectrum of prolific value-additive angels.
What are you waiting for — try it out !
