Throughout our tax transformation blog series, we’ve covered a whole host of topics relating to automating tax compliance. From getting stakeholder buy-in and understanding CEOs and CFOs concerns around tax transformation to delving into how automation and machine learning could propel tax functions beyond compliance alone. We’d like to think that we’ve left no stone unturned!
In the last blog of this series, we investigate the practicalities, considerations and benefits of tax transformation. The term has become somewhat of a buzzword within the industry, but what does tax transformation look like within a business? A tax leaders roundtable attendant highlights “We hear a lot about a very vague description of what transformation, or a solution might look like. It’s really hard to see exactly how that is going to work in practice”. This article seeks to lift the veil of mystery surrounding the practicalities of tax transformation and discuss what businesses need to do to ensure a smooth transition.
Become Part of The IT Crowd
In order to successfully implement, maintain and fully leverage tax transformation, the tax and IT department need to work closely together. This is a point that became incredibly apparent during our roundtable discussion. When assessing the capabilities of a digital platform, it needs to fulfil both the tax and IT department’s requirements. A solution which lacks seamless integration with your current business and ERP systems, tax processes, or simply isn’t GDPR compliant is unlikely to get buy-in from IT – let alone the wider business.
Security should also be high on the agenda. Cybersecurity Ventures, a leading global cyber economy researcher, estimates that cybercrime will cost the world $6 trillion annually by 2021. Cybercrime is a growing concern for many organisations and all businesses must take precautions to ensure their systems are protected. An information security certification, such as ISO 27001, helps to instil confidence within the IT department and wider organisation that financial data will be kept secure and protected.
How future-proofed is your solution? It’s worth bearing in mind that the current implementation of MTD is only the beginning of HMRC’s vision to become “one of the most digitally advanced tax administrations in the world”, so there are more changes to come – Corporation tax is likely next, for example. Many platforms currently provide ‘bridging software’, which is only a quick fix, not a comprehensive solution. Although this may provide an immediate remedy and a simple solution for IT, it won’t help satisfy HMRC’s upcoming digital link requirement or guarantee compliance with future MTD changes. Now that you’ve piqued senior managements interest, what are some of the benefits to digitalising tax?
Reduce Time and Improve Accuracy
For many companies compiling and submitting tax is an arduous, manual task that can take several hours, days or possibly weeks depending upon the complexity of the business. With a digital tax solution this time could be significantly reduced, allowing the tax department to focus on delivering higher value to the business. As tax authorities move towards a real-time view of a business’s tax position, this will enable companies to make better-informed business decisions.
Excel is an Indirect Tax Manager’s best friend and has been for many years. However, the manual and repetitive nature of data entry means that errors can occur – especially if multiple users are inputting data. Inaccurate data entry is one of the leading causes of incorrect tax submissions, potentially resulting in huge fines for companies or lost business due to reputational damage. Digital tax solutions help to dramatically reduce data entry errors in a variety of ways. At Arkk Solutions, our for:sight platform works with your raw source data format, with no need for manual intervention. Furthermore, it uses machine learning to identify anomalies for the tax department to investigate, using a feature called Fix and Verify.
Improved Regulatory and Statutory Reporting
More often than not, VAT submissions and reporting are simply a requirement to meet the compliance needs of HMRC. Tax departments’ resources are being continually stretched – managing complex issues such as multi-jurisdiction tax compliance or keeping up to date with the latest reporting legislation, leaving little room for anything else.
With the aid of tax software, tax departments will be able to update, compile and configure recent financial data with ease giving a much more accurate representation of their current tax position. This has multiple benefits; better quality tax data means that companies can assess and identify trends in the market and make better business decisions. It also means fewer unexpected surprises and improved tax transparency.
Tax Transformation Now and In The Future
Tax transformation is already happening. Many countries including Spain, Brazil and Poland have embraced the adoption of digital tax models so it’s likely that the UK will follow suit. HMRC’s ambitious plan to digitalise tax is starting with VAT, but companies across the UK should use this as an opportunity to assess their entire current tax processes and implement reforms.
Digital platforms such as for:sight for tax, Arkk’s proprietary tax solution, will not only simplify and automate tax compliance but provide reassurance that looking into the future, companies will stay compliant with the ever-changing landscape of a forward-thinking digital tax administration. As a roundtable tax leader stated, ‘the biggest challenge in my role is not just finding out what’s happening now, but what’s going to happen in two or three years’.
The increasing demand for tax transparency and accountability can seem daunting for companies, however, practical digital solutions can support tax departments as they venture into the new realm of tax transformation. If you’re interested in transforming the tax processes for your organisation, contact us on 0207 037 2758 or firstname.lastname@example.org for a demo.