Are you a mid-sized company that lacks confidence in the accuracy of your tax? If so, you’re not alone. Research by Arkk Solutions found that over a quarter of mid-sized firms admit their tax isn’t ‘very or 100%’ accurate – despite all respondents rating accuracy as their top tax priority. Why is this? And what can you do about it?
Russell Gammon, Chief Product Officer at Arkk Solutions, says the confidence crisis is because mid-sized firms find it harder to make the case for transforming their tax technology:
If you’re a small firm, you may have fewer transactions. At the enterprise end, you are likely to have a bigger team and tax software to support you. Whereas in the middle, you have an increasing number of transactions which become unmanageable for the finance or IT team and it can be harder to make the case for additional resources to implement the smarter tax processes that would help.
While all businesses must now get software in place to submit their VAT digitally (mandated by the Making Tax Digital initiative), many ‘quick-fix’ solutions out there only go so far to instil tax accuracy. Here are Russell’s three tips to improve longer-term confidence:
1. Show how the value of tax technology outweighs the cost
Our research found that 37% of companies take 21 days or more to prepare, check and submit their VAT returns. Assuming that returns are submitted quarterly, that means tax teams are spending nearly four working months of the year on manual data manipulation.
Much of this time-consuming work – such as checking invoices over a certain value, or finding errors between VAT rates and tax codes – can be automated with tax technology. And with automation comes accuracy, which will breed greater tax confidence.
It also frees up time for your skilled people to focus on more strategic tasks, like analytical reviews and trend analyses, which can deliver value to the business far in excess of the cost of the technology investment itself. It’s a win-win.
2. Prepare now for future changes in legislation
Making Tax Digital has only really just begun. In the next 10 years, we could see the end of the 21-day VAT submission period, and a requirement for companies to provide a real-time view of their tax position.
Companies considering technology solutions for compliance today should really also factor in potential future requirements: like shorter reporting cycles, far more granular data submissions, and the digitisation of other taxes such as Corporation Tax.
By taking a long-term view of your technology requirements you’ll be better placed to have long-term confidence in your tax outlook.
3. Build bridges between tax, finance and IT
Improving tax accuracy, and confidence, can’t be done in isolation. Procuring and implementing new technology requires close collaboration between tax, finance and IT.
Getting relevant stakeholders on the same page, in terms of what technology is needed and how it will add value, will help you build a compelling business case together.
This will help you sell the idea to senior management that tax transformation is the right path – not just to accurate tax, but all-round organisational confidence.
For more insights on how to transform your tax function, please visit arkksolutions.com