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What is personal tax automation and how can it benefit my practice?

18th Jun 2024
Brought to you by
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Wolters Kluwer provides software to tax and accounting professionals.

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If you're not automating your personal tax returns, you’re missing an opportunity to save time and money. 

Why? Because personal tax returns are a time-consuming process, and practices that automate them are offering clients a quick and error-free experience.  

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For accounting professionals, understanding and leveraging automation technology can provide significant benefits to their practice. But what exactly is personal tax automation, and how can it enhance your accounting practice? 

What is personal tax automation? 

Personal tax automation refers to the use of software and technology to streamline and automate the process of preparing and filing personal tax returns.  

These automated systems handle a variety of tasks traditionally done manually, such as: 

  • Collecting and organising financial data 

  • Calculating tax liabilities 

  • Ensuring compliance with current tax laws and regulations 

  • Identifying potential deductions and credits 

  • Preparing and filing tax returns 

This technology can leverage algorithms, machine learning, and artificial intelligence to process vast amounts of data quickly and accurately, reducing the need for manual intervention. 

How can personal tax automation benefit my practice? 

1. Increased efficiency and productivity 

Personal tax automation significantly reduces the time spent on routine tasks.  Automated systems can quickly organise data, perform calculations, and generate tax returns, freeing up your time for more strategic activities—such as relationships with clients.  

Use personal tax automation tools to streamline your processes and complete more tax returns in less time. All while ensuring compliance with tax regulations and freeing up staff to focus on higher-value tasks. 

2. Improved accuracy and reduced errors 

Manual tax preparation is prone to human error, which can lead to costly mistakes and client dissatisfaction.  

Automated systems are designed to minimise these errors by ensuring data is entered correctly and calculations are accurate, leading to more precise tax returns and fewer issues. 

3. Improved compliance 

Staying up-to-date with constantly changing tax laws can be challenging. Automated tax software is regularly updated to reflect the latest regulations, ensuring that all filings are compliant. This reduces the risk of penalties and enhances your credibility as a knowledgeable professional. 

4. Cost savings 

By automating routine tasks, you can reduce the amount of time and resources spent on tax preparation. This efficiency translates into cost savings for your practice, allowing you to offer competitive pricing to your clients or invest in other areas of your business. 

5. Enhanced client experience 

Clients expect timely and accurate service. Personal tax automation allows you to provide faster turnaround times and more accurate tax returns.  

Automated systems can also offer clients real-time updates and insights into their tax status, improving transparency and trust. 

6. Ability to offer value-added services 

With the time saved through automation, you can focus on providing more value-added services, such as tax planning, financial consulting, and business advisory services.  

These services not only generate higher revenue but also strengthen your relationship with clients by addressing their broader financial needs. 

7. Scalability 

As your practice grows, handling an increasing number of clients can become challenging. Personal tax automation enables you to scale your operations efficiently. You can manage a larger client base without a corresponding increase in staff, ensuring consistent service quality as your business expands. 

8. Data security 

Automated tax systems are designed with robust security features to protect sensitive client information. With encryption, secure access controls, and regular updates, these systems help safeguard data against breaches and cyber threats, ensuring compliance with data protection regulations. 

 

How do personal tax automation tools work? 

Automation may sound complicated, but for the user—you—it makes your work much easier.  

For example, when using our personal tax automation tool, powered by FD Intelligence, this is what the process looks like: 

  1. Income documents arrive via your firm’s inbox or portal where the system automatically downloads the document to a secure processing centre.  

  1. Reading from single PDFs or multiple attachments, it then classifies each document, checking for income types such as employment income, bank interest, investment income, pensions, or capital gains.  

  1. Based on its development and training on thousands of similar documents, the tool can recognise a P11D or bank statement, for example. It can even spot information in unstructured data such as emails where a client has written a few lines about dividends, bank interest, or charity donations. 

  1. The system then creates a bookmarked PDF working paper for the tax adviser. Once it has downloaded and classified the information, the tool extracts the relevant tax data and presents it back to the tax adviser in a workflow tool for review and approval It then presents a confidence rating on each data extraction, showing that, for example, based on its training it is 99% confident the data is correct. 

  1. Tax advisers can interact with the tool, checking its work and answering any queries it may have, and it also learns from adjustments made by tax advisers to improve for the future. 

  1. The data is then validated against any appropriate business rules, after which the system opens the client’s file in CCH Personal Tax and enters the data into their tax return, ensuring existing tax sources from previous years are updated or creating new lines where necessary.  

  1. Once the tax adviser has checked and approved the return, it is filed with HMRC, which can either be done by the tool or the tax adviser. 

 

Personal tax automation is revolutionising the way accounting practices operate. By adopting automation technology, you can enhance efficiency, accuracy, and compliance, while improving client satisfaction and positioning your practice for growth.  

Interested in finding out more of the benefits of automating personal tax returns? 

Learn more about our personal tax automation tool.