The tax profession is predicting greater use of, and reliance on, artificial intelligence (AI) within just 18 months, which could leave firms that are not prioritising adopting the technology at risk of being left behind.
The recent Thomson Reuters Future of Professionals report revealed that almost a fifth (18%) of firms worldwide expect that within the next year and a half we will see AI, including generative AI, being adopted more across the tax profession.
The number of firms forecasting greater use increases to 30% when asked about the next five years. But what does that mean for tax firms yet to consider the adoption of AI? Are they at risk of becoming obsolete in just a matter of months?
Crucial impact
The survey of more than 1,200 professionals working in the UK, US, Canada and Latin America shares the predicted impact that generative AI will have on the future of professional work. For the tax industry, it reveals that AI is now crucial in helping to free up time for professionals to deliver more value. Almost half (45%) of tax professionals worldwide say their biggest hope for AI is that it will help them boost client services, internal efficiency and productivity. AI is expected to have a marked impact on the output of each practitioner, so much so that 77% of UK tax professionals said incorporating AI into daily activities will increase productivity.
Other benefits
Boosting productivity and efficiency could benefit tax professionals in numerous ways other than profitability. AI can automate mundane accounting tasks, as well as provide real-time insight into changing tax regulations and simulate various financial strategies to determine the most tax-efficient options.
Additionally, more than a quarter of professionals (28%) say that work negatively impacts their mental health, largely due to long working hours and the fear of making errors. Making use of automated data entry, fraud detection algorithms or even using AI chatbots to help with routine client queries online can significantly reduce the burden on overworked staff. AI can even identify potential compliance risks and flag them for review.
AI tools such as automatic document categorising or predictive analysis can also reduce the time it takes to get accurate results. Given the critical need for accuracy in tax, AI is expected to become ubiquitous within the profession soon. As many as 67% of professionals worldwide believe AI will have a transformational or high impact on their profession over the next five years.
As demand for AI services grows, proficiency in use of the technology is likely to become essential within the tax sector. An overwhelming majority of UK professionals (88%) believe AI training will become compulsory for professionals within the next five years. There is likely to be a greater focus on learning new technological systems and a need to keep updated on new advancements. In the longer term, tax professionals may be able to leverage generative AI to support with training and upskilling of junior and new staff in their firms.
Prepare for change
Tax professionals are now ready to embrace AI to boost profitability and offer a better overall client experience, but change will inevitably create some upheaval. To ensure the most desirable outcome, tax firms and professionals should consider what it means to be an adviser, not just for today but for the future, and promptly transform business models to prepare clients for changes. If executed correctly, AI could have a tremendous impact across the entire tax and accounting profession.
