As the tax morality debate continues to gather momentum, governments are calling for business owners to keep tax transformation and transparency top of mind.
The OECD’s global transparency initiative is the single largest tax information exchange in history. Voluntary disclosure promoted by this agenda has generated more than EUR 95 billion in additional revenue for OECD and G20 countries through tax, interest and penalties over the 2009-2019 period. Note 1
The underlying message is crystal clear – if your business makes a profit, you must pay your fair share of tax. There is simply nowhere left to hide….
The Making Tax Digital (MTD) mandate is HMRC’s first step towards a complete digital transformation of financial reporting in the UK.
Don’t be under any illusion that this is just another government process that must be followed for process’ sake. MTD and its logical successors will change the landscape by challenging tax departments to re-evaluate how they collect, validate and communicate financial information – both internally and externally.
The error-prone, manual methods of yesteryear such as manipulating accounting information on spreadsheets, or extracting data from black box legacy databases are out of place in today’s digital age. Let’s be honest, no CFO wishes to become another Patisserie Valerie or Conviviality type casualty if they can possibly avoid it.
Government-led financial initiatives should be viewed as a positive opportunity for change. Simplifying and automating existing workflows using best-in-class technology can bring:
- Fewer unexpected surprises and operational risks
- Improved resource management and motivation for key staff
- Reduced compliance management burdens
- More accurate and actionable financial information for the business
The last bullet is a great one to end on – elevating tax to become an enabler that informs commercial decision making is surely something that every business should aspire to.
A true paradigm shift, as they say.
Note 1: Source: “Implementation of tax transparency initiative delivering concrete and impressive results” (7th June 2019)