Tax authorities are increasingly going digital through the use of Making Tax Digital (MTD), Country-by-Country Reporting (CbCR) and Common Reporting Standard (CRS), along with developing new tax policies requiring increased transparency and sharing of data.
The burden is on the tax department of businesses to report more data than they have ever had to before. This in turns leads to a need for more data extraction and integration, a better understanding of the data available and improved efficiency to complete the extra work.
Digitalised tax administration
Making Tax Digital (MTD) is part of a much wider trend involving the global digitalisation of tax. This presents a unique opportunity for the tax function to capitalise on technological advancements and gain control over data and processes.
The tax technology and transformation team at Evelyn Partners has extensive experience to help businesses translate tax requirements to technologically-enabled solutions.
Our services include:
- Establishing tax technology strategies within the organisation
- Conducting a process review and recommending potential technological improvements to reduce effort and streamline processes
- Scoping, designing and implementing tax applications, such as AlphaVAT
- Designing and deploying Robotic Process Automation (RPA)
- Generating financial and tax insight through data analytics and data visualisation
Systems and process review
A systems and process review can often be the best first step to take in the journal of transformation. Evelyn Partners can bridge the gap between tax and IT to identify risk areas and recommend better controls and improvement opportunities. It is worth considering a review when there are:
- Mergers, acquisitions or disposal of entities
- Changes of enterprise resource planning (ERP) or accounting systems
- Wider financial transformation initiatives
- Regulatory changes
Robotic Process Automation
RPA software is a powerful tool that can perform manual, time-consuming, rules-based tasks, more efficiently than humans. For example, it is estimated that 15 minutes of human time is equal to one minute of robot time.
It can be used to gather, collate and validate information including:
- Data extraction
- Data administration
- Data processing
- Tax computations
- Form processing
- Document management
With RPA, the ease of deployment and the speed of processes can open the doors of agility to businesses. By deploying RPA processes at the departmental level, they can support repetitive processes, achieving efficiencies and cost savings while preserving flexibility. These types of processes are especially common in tax, finance and accounting, HR and form processing, but can also be found in all parts of a business.
Benefits of Robotic Process Automation
Data is everywhere, from your phone’s weekly screen time report to HMRC’s Making Tax Digital. It is one of the most valuable assets a company owns and is highly under utilised.
By collating information from across their organisation and industry, businesses can gain a better understanding of their activities as well as insight into potential improvements and efficiencies. Advanced analytics tools assist in better achieving these goals.
Evelyn Partners can work with you to conduct data analytics and generate rapid business intelligence. Benefits to your business include improvements in tax reporting, better decision-making, cost reductions and identifying your tax trends.
Making Tax Digital
MTD is HMRC's strategy to modernise the tax system. As well as improving HMRC’s own internal systems, MTD involves mandatory digital record keeping and reporting by taxpayers. This is live for VAT and will shortly be introduced for personal tax and corporation tax. Combining the tax and technology industry insights, Evelyn Partners can support businesses from readiness assessment to solution selection to implementation for all budgets.
Frequently asked questions about tax technology
What is tax technology?
Building a high performing and future proof tax function is critical to business success.
Effective use of technology, including automation, data management and analytics, is a key component to making any business successful. Businesses must innovate and identify more efficient ways of meeting the ever-expanding needs of today, while tackling tomorrow's challenges. Through the use of technology, finance and tax teams can focus on high value work and distribute more relevant information, contributing to overall business success.
How is technology changing the authorities approaches to taxation?
Future plans will see tax authorities using big data analytics and artificial intelligence to fight against tax evasion and fraud as well as create new taxes.
Digitalisation of tax is not just being driven by technology but also legislation, with more countries moving away from periodic assessments towards real-time or transactional compliance.
The burden is on the tax department of organisations to report more data than they have ever before. Tax regimes such as FATCA, CRS, BEPS and DAC6 place a huge data burden on the tax department to sort through data and then report digitally.
Tax authorities are collecting more data, in more detail, more often, but the interesting part is they are using this data to understand, evaluate and analyse taxpayers.
Everyone from the self-employed and SMEs to global and national institutions will find that their relationship with the HMRC will soon look and operate very differently.
Do we really need technology in our tax or finance function?
Technology paves the way to handling business and legislative challenges in an effective, efficient and most importantly, accurate way.
Regulatory reporting requirements are increasingly complex. The volume and complexity of the data that has to be collated, processed and communicated are increasing.
Technology paves the way to handling these challenges in an effective and efficient way.
There are some questions you should ask yourself to help understand if you could benefit from adopting more tax technology:
- Are your compliance processes efficient, accurate and streamlined?
- Do your tax provision, compliance and planning processes help mitigate risk and have a clear audit trail?
- Are you getting optimal output from your tax or finance department?
- Do you have a clear understanding of your total tax liability?
What does ‘digitalised tax function’ mean to me?
There are several key areas that a digitalised tax function should look to deliver to any and every organisation.
A digitalised tax and finance function should look to deliver the following:
- Standardised data structure and architecture
- Improved data quality
- The capability to run detailed data analytics and visualisation
- Process automation and the increased use of robotics
- Integration of emerging technologies including harnessing cloud capabilities and application programming interfaces to gather and transfer data seamlessly
- Governance dashboards and workflow management
Surely the technology moves so quickly that it’s out of date by the time it goes live in my business?
The need to manage and maintain technology solutions means that they never sit still. They are never the ‘final’ version deployed.
The legislative landscape changes daily, weekly, monthly or annually, depending on which country you are based in and to which reporting requirements you and your business need to respond.
Technology platforms are constantly being updated to deal with changes in legislation and add capabilities as new reporting requirements are introduced by local authorities.
As reporting requirements become more complex, so technology becomes more suitable to ensure that individuals and businesses can sign off to confirm that they are:
- Demonstrating reasonable care
- Able to respond easily to change
- Able to provide fully auditable data sets to local authorities
Does technology enablement mean lengthy and costly projects?
There is a natural assumption that technology projects will be time consuming, resource intensive and heavily invasive, impacting all current processes.
Technology improvement can be looked at in two different ways. The first is a large transformational project that will impact people, processes and technology in the organisation over, typically, two to three years.
The other is taking small steps and making minor changes across regular two to six week sprints. Each small change made to the technology system improves a small part of a process or function and is far less invasive and less costly than a major transformational exercise.
The benefit of regular sprints and the ‘small steps’ approach is that the transformation of a business can be as large or small as it needs to be.