The blossoming relationship between tax and technology

In Thomson Reuters’ 2019 Tax Technology Survey, it was revealed that 76% of the senior tax executives asked have seen an increase in the attention placed on tax compliance and planning at board level.

This has largely been driven by the implementation of Making Tax Digital for VAT by HMRC.

Our team of accountants are advocate the use of technology in accounting and since our inception in 2013 we have been harnessing the power of cloud software to help drive our clients forward at a faster rate than their competitors.

Has your business made the move from traditional to technological yet? Our expert team are certified to help make the process a smooth one and get the very best from your new software.

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Entire tax industry investing in tech

In the above poll, a huge 98% of the tax professionals revealed that they plan to invest in tax technology over the next 12 months.

In 2018, this percentage was reported at 54% of those surveyed - this highlights a significant surge of executives looking to expand their presence in the arena of technology.

Of the 98% who revealed they had plans to invest in this area, further results said:

• The respondents planning to increase their spending significantly: 28%

• The respondents planning to increase their spending only slightly: 32%

• The respondents planning to keep spending stable: 38%

The main driver found by the survey to be the main reason for this anticipated investment is the rise in digitally capable tax authorities.

“Almost half (45%) of respondents said that they had started or have plans to implement digital tax filing and compliance for new standards, such as MTD and Standard Audit File for Tax (SAF-T)—the international standard for the electronic exchange of reliable accounting data, as defined by the Organisation for Economic Co-operation and Development (OECD),” a statement attached to the survey said.

However, the number of respondents who revealed that they are being asked to provide more detail surrounding the contents of their filings has fallen over the same period of time, from 52% in 2018 to 32% in 2019.

“Whereas GDPR impacted organisations in 2018, 23% of tax professionals reported that one of the key challenges facing their tax department for 2019 is Brexit,” the statement continued.

Thomson Reuters has indicated that this drop could be due to the fact that some tax authorities – such as Poland – are well advanced into their SAF-T introduction.

This is enabling these tax authorities to see the level of detail they initially require coming straight through from the corporate tax departments.

Rise of digital tax authorities

There is clear evidence from Poland and Spain that implementing new digital and near real-time reporting obligations yields significant return in tax revenue.

It is inevitable we will see more and more jurisdictions following suit in the coming years, and multinational corporations need to be prepared to address these requirements with future-proofed technology solutions.

Furthermore, the survey suggests many tax departments are trying to centralise and manage compliance across multiple jurisdictions in response to the continued globalisation and digitisation of tax.

This interest in new technologies indicates that tax departments are recognising that the deployment of tax technology can help increase efficiencies, reduce human error, and deliver a consistent and manageable way of addressing these new tax regulations.

Through the centralisation of the process, an ordered building of this new world in the tax industry can be controlled so that it is as seamless and painless as possible.

Whereas GDPR impacted organisations in 2018, 23% of tax professionals reported that one of the key challenges facing their tax department for 2019 is Brexit, according to the survey.

The requirement to keep up with the newest regulations and processes has been cited as a concern for respondents to the survey, with a 20% year-on-year increase.

As it stands, 36% of those surveyed admitted being concerned about this. A further 30% of departments recognised the need for increased efficiency for internal processes and workflow - a 12% increase from 2018.

Technology to hit the tax department

Unsurprisingly, the results from the poll have shown that tax departments across the UK wish to adopt in-house technology, rather than having the additional cost and hassle of outsourcing.

The interest in new technologies indicates that tax departments are recognising that the deployment of tax technology can help increase efficiencies, reduce human error, and deliver a consistent and manageable way of addressing these new tax regulations, some that Accounts and Legal has honed over the past six years.

Having efficient and effective in-house technology allows our team to take control of the digital tax transformation.

Compliance is in the midst of a revolution, and, looking forward, we can expect to see more regulatory attention to the process and governance, rather than the end number.

There has been a 20% “leap” in the acknowledged interest of new technologies in the market, as the pressure of gaining a competitive edge and staying ahead of the tax authorities continues.

The survey also looked at the increase of technologies being implemented, investigated, or already live:

• Big Data Analytics: 60%

• Blockchain: 39% (from 16%)

• Robotic Process Automation (RPA): 56%

In a digital world, the tax authorities will easily be able to validate the output. Tax teams like ours are ready for this modern shift.