By Andy Mills, Commercial Director, Tax Systems
The tax and finance sector is experiencing unprecedented change with compliance demands driving the adoption of technology. Making Tax Digital (MTD) is a notable example which has seen HMRC introduce a minimum set of automation requirements. The compliance solution the business selects, however, is crucial as it will determine its ability to realise efficiency and productivity gains in the longer term.
First and foremost, automation can alleviate workloads. Up to 75% of compliance time is commonly spent on manual data collection. Automating the collection of large volumes of data, in different formats and locations, and from group entities or even third parties, will be key to reducing manual activity, complexity and achieving economies of scale.
Data then needs to be unified into one place to aid visibility. Controls governing access need to be applied as well as assistance in the form of hints, prompts and nudges. This then frees up the tax professional to take a proactive rather than retroactive stance and focus on offering advice for the year ahead.
Reducing human input will increase accuracy but this can be further improved by automating calculations. Many of the accountancy systems in use today are too inflexible for calculations to be performed within them but a compliance engine can collect, cleanse and amalgamate data AND apply complex calculations before completing the VAT return, helping to reduce error.
On the horizon is the prospect of yet more change. We can expect to see tax authorities move closer to near or real-time reporting. Our view is that HMRC may well follow the likes of Spain and Brazil in the longer term (demanding real-time transaction data to support electronic auditing) and that corporation tax will be brought under MTD at some point after 2021. Embracing automation today will therefore mean the business is better prepared for the compliance demands of tomorrow.
Andy Mills, Commercial Director, Tax Systemsenquiries@taxsystems.comwww.taxsystems.com