In the run-up to the Tax Transformation Summit 2018, Arkk Solutions surveyed tax and finance experts to gain an understanding of their use of technology in 2019
We asked the 150+ delegates of last weeks’ Tax Transformation Summit to share their insights on priorities in 2019 and the biggest challenges facing tax professionals.
The Impact of Tech
Delegates were split 50:50 between their use of technology in tax. Half said that part of their process is automated, and half said they mostly use Excel. Notably, no delegates were using entirely paper-based or entirely automated approaches for tax.
Specifically relating to Making Tax Digital, delates shared their view on the digital link requirement, expected in 2020 from HMRC. All delegates acknowledged that whilst Excel is the tool of choice for some parts of the process, it will not be enough on its own for this next step. 58% felt that dedicated software would better satisfy this link, with a quarter of respondents having not yet completed an internal project to assess the scale of the requirements. Just under a fifth shared that they don’t know about the digital link requirement, which will become a mandatory part of Making Tax Digital in 2020.
Priorities in 2019
Brexit may have topped headlines for the past 20 months, but in the tax world, there is a higher priority on the agenda: Making Tax Digital! More than half of delegates cited preparing for MTD:VAT as one of their top priorities, followed by responding to Brexit, and tax reporting. Only 25% were focused on the wider Making Tax Digital mandate, looking ahead to corporation tax and the digital link, with a few respondents citing the cost of compliance in 2019 (and beyond) as a priority.
Diving deeper into HMRC’s latest mandate, almost 60% see Making Tax Digital as an opportunity to consider modernizing the entire tax returns process. This is in line with HMRC’s vision to make themselves “one of the most digitally advanced tax administrations in the world”. A quarter of delegates hadn’t decided how to tackle the mandate, with the remainder currently planning just to tackle the 2019 mandate with no further changes to their processes.
Making Tax Digital approaches
Unsurprisingly, Making Tax Digital was a large focus of the two-day Tax Summit. With 59% of attendees to Arkk and HMRC’s breakout session, “Making Tax Digital for VAT”, saying that they were somewhat prepared for the mandate and a quarter feeling somewhat unprepared, the importance of getting ready for the 2019 deadline is clear.
At our talk, HMRC discussed the delay for firms with “more complex requirements”. When polled, all attendees at the breakout session had been impacted by this change, with 59% saying this push-back had had no impact on their roadmap; this aligns with HMRC’s decision to defer MTD submissions for some of their clients, ensuring that there is a strong uptake of the pilot program in April.
Half of the delegates felt the biggest challenge around complying with Making Tax Digital in 2019 would be around training and resources internally. Technology, and the possibility of adding another step to an already step-heavy process tied for second place, with a few delegates adding additional comments that they find it challenging to make technology decisions without a clear roadmap of MTD’s next steps.
AI and Machine Learning – industry jargon or the future of tax?
Strong contenders for business buzz-words of the year, 50% of respondents said that AI and Machine Learning are concepts they hear about at conferences but have no meaningful practical implementation in their organization. A third of delegates are actively investigating this for future use with the remaining saying that they utilities this already in their tax departments.
Interestingly all delegates agreed that machine learning is necessary for today’s tax environment. Whether actively looking to use this now or considering when it will be appropriate, incorporating some form of machine learning or AI is on everyone’s roadmap.
We’ll be uploading an infographic of all the results from our tax survey later in the month. In the mean-time, if you have any questions about how you’re approaching Making Tax Digital, get in touch with the Arkk team.