The big picture: London-based Record OS, founded by former Wise operators, has raised $2M in a pre-seed round led by Episode 1. The company aims to build a self-assessment and make-tax-digital platform, integrating AI-driven filing with mandatory review by a qualified tax professional. The launch aligns with the UK’s Making Tax Digital initiative, which mandates digital tax submissions for self-employed workers and landlords. You can learn more at Record OS.
Why it matters:
- Regulatory Shift: The UK’s Making Tax Digital (MTD) initiative mandates digital record-keeping and quarterly updates for self-employed individuals and landlords, with income thresholds decreasing to £20,000 by 2028, impacting an estimated 1.7 million people.
- Complexity & Errors: Even experienced finance professionals, including co-founder Dhruv Chadha, have found errors in their self-assessment returns despite professional help, highlighting the process’s confusing and error-prone nature.
- Market Gap: Existing software like Sage and Xero is often complex for individual taxpayers, HMRC’s portal has limited features, and traditional accounting firms are expensive and not scaled for the increased MTD workload.
How it works:
- Hybrid Approach: Record OS combines AI-driven software automation with mandatory human review by a qualified tax professional for every return before submission.
- Data Integration: Users link their financial data, enabling the AI to sort income, identify allowable expenses, and flag potential issues, significantly streamlining the initial filing process.
- Affordable Assurance: The platform offers standard filings with professional sign-off for £125, providing a more affordable alternative to traditional accountants while addressing the need for expert reassurance that software alone cannot provide.
The catch: Record OS enters a competitive landscape with established accounting software providers and traditional accounting firms. While Making Tax Digital creates a clear demand, convincing individuals to switch from existing, albeit flawed, methods or adopt a new platform will require significant user education and trust-building. The reliance on human review, while a key differentiator, could also pose scalability challenges as user numbers grow rapidly under MTD mandates.
Key Facts
- Company: Record OS
- Amount: $2M
- Round: Pre-seed
- Investors: Episode 1 (lead), Wise, Revolut, Deliveroo, Alphabet
- Founders: Dhruv Chadha, José Luis De La Peña
- Sector: Tax Tech
- Headquarters: London, UK
