Last month Arkk held a roundtable with some of our key tax clients in order to understand the challenges they are facing, how they are progressing with Making Tax Digital (MTD) and what they need to have confidence in the figures they are submitting. Over the next few weeks, we will be sharing these insights.
One of the challenges highlighted in last week’s blog was how to elevate the tax department. When tax goes wrong it makes the front pages, but otherwise, it isn’t the CEO or CFOs top concern. But surely it is worth investing in technology and processes before this happens?
Paying the right tax has become synonymous with good business and ethical practices. So why are so many businesses still taking the risk of manual and error-prone processes to submit their returns? When they should be confident in the financials they are submitting.
The finance and tax departments have traditionally been risk-averse due to the nature of the data they hold. Innovation within finance is not doing what you did yesterday, and the technology is now available to ensure that manual processes can become a thing of the past. In the current climate being so risk-averse to change is what is putting the business at risk.
Engaging the stakeholders
The key is engaging the right stakeholders, at the right time, to bring tax up the business agenda. This means being able to highlight the benefits of investment in tax to the CEO, the CFO and the IT department, as all will need to be involved.
Making Tax Digital (MTD) is a great opportunity for tax and finance teams to invest in getting it right. The digital linking requirements of MTD that come into play early next year mean that now is the time to fully digitise tax processes.
So what are the things you need to touch on to get the stakeholders interested in investing time or money into the tax department?
Of course, the first step is to actually make time to talk to them. As one of our tax clients at our recent roundtable pointed out: “Part of the problem is that we don’t always just sit down and have these conversations with the relevant stakeholders. I think what they really want from us is comfort, to know what is actually changing for them. It is about pushing the angle that this is actually going to make their lives easier.”
At the event, our tax clients highlighted the following as the topics that got their stakeholders to the table.
CEOs are interested in:
- Public perception around paying an ethical amount of tax
- Not storing up future tax problems
- Unifying businesses with tax technology to give visibility when there are multiple entities
- The effective tax rate (ETR) and how it impacts business planning purposes
CFOs are interested in:
- No surprises – whether with regulations, forecasts or tax position
- Anticipating changes in legislation quickly and how it relates to their tax position
- Decreasing risk when transaction volumes are increasing
- Confidence in their true tax rate for investors
- Being ahead in audit management
- Trust in their global data
- Being able to deliver time-sensitive up to date reporting to the business for M&A activities
- Having an accurate picture of their tax position in real time
For the IT team, it is more about them giving their time to implement any new technology. This can be a challenge when they have larger projects underway that are perceived as more essential to business success. They will be looking for:
- How any tax software will work with any ongoing ERP consolidation projects without creating additional work
- SaaS solutions that don’t require too much configuration to integrate with other systems
- An approach and technology that has longevity so they won’t need to replace it when another regulation or mandate is introduced
As one of our other clients stated: “The importance of tax has really shot up in light of things like MTD and Brexit. We have to plan for the worst-case scenario.”
So now is the time to take a critical look at how the tax function operates and whether transforming it will help prepare the business for the future. Businesses need to get ahead of any issues to protect the reputation of the company and ensure they have confidence that they are paying the right tax.
If you are interested in hearing how to build a business case for tax transformation and what it might achieve for your organisation call us on 0207 037 2758 or email us on firstname.lastname@example.org for a demo.