Technology revolutionising management of tax
Digitalisation is having an increased impact on the tax and finance team – tax authorities around the world are using sophisticated digital platforms that require businesses to submit tax data in real time, increasing the importance of ensuring that accurate tax information exists in the business at the right time, writes Stuart Wilkinson, office managing partner and head of tax at EY in Cambridge.
It also creates opportunity as it has the potential to make systems more effective, increase standardisation and improve data quality, whether you are a small to medium sized enterprise, owner managed business, or a global company.
Back in 2017, HMRC announced ‘Making Tax Digital’ (‘MTD’) with an initial focus on VAT – it attracted widespread interest, and indeed some negativity in the early stages, with many businesses viewing its implementation and the changes it would bring to transforming tax administration as problematic in the short term, given its proposed implementation timetable.
Responding to feedback, HMRC gave businesses with complex or legacy IT systems the opportunity to apply for additional time to put the required digital links in place, but only if they meet certain qualifying criteria (otherwise the deadline is April 2020).
It’s clear that MTD is here to stay, although the Government did announce in the Spring Statement 2019, that MTD will not be introduced for any new taxes, with the exception of VAT, until the system has been shown to work, and that they will consult on corporation tax before making any decision on whether to bring in MTD for further taxes.
Putting aside the specifics of MTD for a few minutes, what does digital mean for the future of the tax team? For both tax authorities and tax teams, technology disruption and the digital economy have created significant complexity and change. Now, more than ever, the tax team needs to be better connected to how the business makes its money and supplies its goods.
Previously, tax advisers only needed to know how to interpret and apply tax rules. Now the tax team must act as a business adviser, technologist, systems expert and still know how to apply the tax rules!
As a result, we need to attract people into our tax teams that have a wider and different skill set than before. We need coders, software developers, implementors of new technology and people that can create new processes, tools and systems to future proof our own business against digital transformation – many businesses are now recruiting tax technology managers who are busy writing their own role descriptions.
Technology will undoubtedly improve and eventually overtake the process part of our business: there will be less need for human intervention in certain aspects of what the tax team does today.
But we should not be afraid of embracing this change, as it should give us more time to understand the business, to build better relationships with our customers and clients so we can really add value by bringing better tax insights.
We also have to manage the transitions as we move from current ways of working and training to new ways as technology develops.
We should remind ourselves that our greatest asset will always be our people, yet technology offers us a fantastic opportunity to support our talent to learn new skills, embrace new opportunities, and, as a result, have much better experiences during a career in tax.