Save content
Have you found this content useful? Use the button above to save it to your profile.
Tax on Demand screenshot
Tax on Demand

New tool aims to end manual tax reviews

by

Tax on Demand aims to combine AI and automation technologies to automate the client review process, allowing accountants to identify what tax advice clients need in seconds.

26th Jul 2023
Save content
Have you found this content useful? Use the button above to save it to your profile.

There are currently 1,180 tax reliefs in the UK, with the UK tax code running to more than 10 million words – figures not even the most expert of UK tax mavens can hope to fully master.

However, a new tool has been designed to identify what tax advice clients need in areas such as reliefs, allowances and grants, ultimately leading to fee-earning opportunities for accountants.

Tax on Demand extracts tax and accounting data from year end accounts and returns, and runs this source information through its proprietary decision engines to conduct ongoing tax reviews across a firm’s client base.

“‘The end of manual tax reviews’ has been our mantra,” Tax on Demand founder Nick Stobbs told AccountingWEB. “We asked ourselves the fundamental question: could we combine AI technology with tax and accounting data to automate the tax review process?”

The principle of the software is that Tax on Demand is always on in the background, collecting large volumes of data and running it through its bank of tax decision engines.

“We’re putting tax reviews on autopilot,” added Stobbs. “We’ve built it for firms that would like to do tax reviews with their clients but don’t have time. Almost every client engagement is an opportunity – the problem is time and tax knowledge. We want to provide reassurance to accountants that they’ve done all they can from a tax perspective, not just for one client but for their entire client base.”

How does it work?

Tax on Demand’s decision automation technology works on three main principles:

  • Data capture: the automated capture of financial data (trial balance, financial statements and tax returns) from accounts and tax production systems, alongside machine learning (ML) technology to map data to a standard data model, ready for analysis.
  • Decision-making: decision engines emulate the decision-making ability of human tax experts. The engines initially calculate the probability that an area of tax is relevant for a client before working out the potential size and timing of the opportunity. The software also allows accountants to see how a decision has been arrived at, giving them the evidence to support a conversation with the client.
  • Tax efficiency score: the tool produces a unique three-digit efficiency score for each client based on the type of advisory opportunity, its potential size and urgency. The higher the number the more ‘tax efficient’ the client is, and vice versa, helping firms prioritise their workload and allocate resources.
Tax on Demand score
Tax on Demand

Stobbs suggested an example workflow for Tax on Demand users looking to run the tool on a daily basis.

“Tax on Demand could be set to come alive at 2am, collect client data from the previous day, run it through the decision engines then produce the results at 6am, notifying the accountant of any changes ready for the day ahead,” said Stobbs. “For example, you could log in and find a message stating ‘go and speak to client x today about tax legislation change y’ or ‘there’s been a new grant announced’”.

In the future, the vendor hopes to be able to interface with a range of proposal and practice management tools, but Stobbs was adamant that the tool will continue to sit firmly on the ‘identification of opportunities’ rather than get involved in the implementation.

“We’ll identify the tax advisory opportunities then leave it to the accountant to either implement in-house or refer to a tax specialist,” he said.

Tackling the long tail

Since April 2021, Tax on Demand has been working exclusively with an innovators group to test its decision automation technology, reviewing more than 2,500 clients across more than 13,000 accounting periods. Now set for their first public release in September 2023, the vendor is opening its doors to a first batch of paying subscribers.

At the time of writing, the platform has 15 decision engines slated for public release, which Stobbs admits barely scratches the surface of the UK tax code.

“We currently cover the major fiscal incentives and reliefs, alongside grant funding” said Stobbs. “We aim to have mapped all the major tax review areas and have them live on our platform by December 2024”.

Stobbs flagged dredging allowance as a particularly good example of what the vendor is trying to do in picking up what he dubs the ‘long tail’ of low-frequency, hard-to-spot reliefs and allowances.

“For a typical practice, dredging allowances may pop up once every five or 10 years, if at all," he said. "It’s not a standard review area and therefore it’s likely it could be missed, but with our software, the accountant doesn’t have to worry about spotting the opportunity, it will automatically be identified. We’re helping the accountant to protect themselves against missing anything, and also helping their clients be as tax efficient as possible.

“The whole point of Tax on Demand is to do the heavy lifting and identify what tax advice clients need. By automating the manually intensive and time-consuming process we free up the accountant’s time to do what they do best and clients value the most: listening, building relationships and providing proactive advice. Ultimately helping them to protect their existing client base, maximise fee income and win new clients."

To register your interest in Tax on Demand, visit their website and complete the form. The vendor’s current plan for its pricing model is a monthly subscription based on the number of clients under review. Small practices would pay £149 per month, with the price rising accordingly.

Replies (29)

Please login or register to join the discussion.

Mark Lee headshot 2023
By Mark Lee
26th Jul 2023 15:50

Great to see this going live. I well remember Nick's enthusiasm a while back when he first told me about his dream that has led to the development of Tax On Demand. He has a first class team working with him (NB: It doesn't include me and I haven't been paid or incentivised to say any of this!!)

Thanks (2)
Replying to bookmarklee:
avatar
By johnjenkins
27th Jul 2023 10:07

Mark, I bow to your superiority on high tech especially AI. However (yes you know there is always a however) the article states that this software will advise the Accountant on tax advice. Does AI know the client? No. So, yes advice will be churned out but it might not necessarily fit the clients' situation. The advice is based purely on figures (cos that's what glorified calculators do), you could probably stick in a few "trends" but overall, £1800 (you know it will be more) for a small business to come up with what most Accountants know already is a bit much.
Yes you guessed it Mark, I've got my anti marketing hat on. My view is that, yes a lot of hard work has gone into it, but this is just another gimmicky piece of software to stop Accountants doing what they do best and that is to get to know your client and advise accordingly. If we carry on relying on gimmicky software to do our job then it's the start of the end for Accountants.

Thanks (6)
Replying to johnjenkins:
Nick Stobbs
By NickStobbsToD
27th Jul 2023 12:35

Hi John, thanks for taking the time to read the article and appreciate your comments. Clarification on the pricing; we're a SaaS product for the accountant who pays a monthly subscription fee (unlimited users/seats) - so, £1,800 per year would be for the practice as a whole which allows us to constantly review their entire client base (<80p per client per year). We do all the manually intensive, time-consuming and complex review work (the "heavy lifting") - we're certainly not here to replace jobs.

Thanks (0)
Replying to NickStobbsToD:
avatar
By johnjenkins
27th Jul 2023 14:08

Hi Nick, thanks for coming back to me. I'm sure you have put in a lot of hard work into your project, however (the dreaded however) schemes that are used for added value to the fee, take away the prime purpose of an Accountants work. The reason they take away that work is the reliance on the advice or "why". It's a psychological thing "oh I can use this software and charge the client more for the privilege" which can lead to complacency. What tax advice would it come out with concerning IR35?
Banks did it with insurance. Yes insurance is a good thing to have with an overdraft or loan, however the reason for it being there was lost and it became mandatory because there was money to be made (that's just an example of the psychological effect). The rest is history.
I'll be honest with you Nick, I don't think I would want anyone or thing to constantly review my entire client base.

Thanks (2)
Replying to johnjenkins:
Mark Lee headshot 2023
By Mark Lee
28th Jul 2023 15:26

Hi John, My understanding is that ToD identifies the opportunities (for tax advice) and it is for the accountants to decide whether to give advice or not. The software does not give advice.

Thanks (2)
Replying to bookmarklee:
avatar
By johnjenkins
31st Jul 2023 10:05

Hi Mark, my view is that if an Accountant can't identify "opportunities" then they shouldn't be in practice. Now if you had said it's a good opportunity for bookkeepers to enhance their business, then I would agree, but I can't see them paying £1800 for the privilege.

Thanks (0)
Replying to johnjenkins:
Mark Lee headshot 2023
By Mark Lee
01st Aug 2023 16:09

As ever John, you're entitled to your view. In my experience most accountants are just too busy to make time to seek out all such opportunities themselves.

Thanks (0)
Replying to bookmarklee:
avatar
By johnjenkins
02nd Aug 2023 09:48

Mark, I really don't understand your thought processes on what an Accountant is. Perhaps it's because my training taught me how to be an Accountant. Everybody, these days are busy, just look at the NHS. Being busy doesn't stop you from knowing what advice to give to your client. As I have said, once you lose that emphasis, then it's a downhill spiral.

Thanks (1)
Replying to johnjenkins:
Mark Lee headshot 2023
By Mark Lee
03rd Aug 2023 10:41

johnjenkins wrote:

Mark, I really don't understand your thought processes on what an Accountant is.

. No reason why you should John. We are all different with different experiences and different views. I'm happy that a significant number of accountants seem to relate to and appreciate my views, insights and advice. I think we concluded a long time back that you would never be one of those as your perspective is very different to mine. Doesn't make you wrong, just different. And that's fine.
Thanks (0)
Replying to bookmarklee:
avatar
By johnjenkins
03rd Aug 2023 12:29

I know I'm fighting a losing battle to persuade you that marketing gimmicks (especially if you have to pay for them) have no place in Accountancy, even if they are disguised as "taking the burden off our shoulders".

Thanks (0)
John Toon
By John Toon
27th Jul 2023 09:58

Great to see this product finally coming to life. Will be interesting to see what the accounting/tax world makes of this, particularly as this kind of tech has mainly been the preserve of Big 4 firms until now.

It's likely the start of many similar products expecting to launch in the coming months!

Thanks (3)
Replying to johnt27:
Nick Stobbs
By NickStobbsToD
27th Jul 2023 12:36

Thanks, John - let the race begin!

Thanks (0)
avatar
By Casterbridge Hardy LLP
27th Jul 2023 10:39

Extinction looms on the horizon for tax advisors (apparently accountants are second in line in the extinction line after mathematicians).

I think that I may retrain as a train driver or a deck chair attendant!

Thanks (3)
Replying to Casterbridge Hardy LLP:
Nick Stobbs
By NickStobbsToD
27th Jul 2023 12:38

Just identification of the tax advisory opportunities; not the implementation! We're all about empowering the accountant/tax adviser...

Thanks (1)
Profile
By indomitable
27th Jul 2023 13:34

Looks good BUT the proof will be in using it to see if it doesn't make fundamental mistakes or even make things up like chatgpt.

If it works £1,800 pa not particularly pricey but it HAS to work and add value and agreed dredging through reams of info even though you know where to look is extremely time consuming. If something can significantly speed up this process it will be a great thing, but has to be accurate

Thanks (1)
Replying to indomitable:
avatar
By johnjenkins
27th Jul 2023 13:49

3 weetabix will always give you hiccups.

Thanks (1)
Replying to johnjenkins:
Profile
By indomitable
27th Jul 2023 14:50

I love technology!!!

Thanks (1)
Replying to indomitable:
avatar
By johnjenkins
27th Jul 2023 15:37

We are told "everything is instant" etc. except, of course, when we try to post a comment.

Thanks (1)
By ireallyshouldknowthisbut
28th Jul 2023 10:31

So lets get this right, the tool chunks through the data, and throws up a checklist of possible areas to look at?

That sounds like an interesting incremental improvement, but if you over hype it by dropping in this years big buzz word "AI" *yawn* [see you all yawned too] you risk being in the massive pile of 'just another nice sounding analysis product, which never really lived up to expectations as it was garbage in/garbage out system', before quickly disappearing. Like 95%+ of breathlessly announced software products.

I am reminded of Xero's "exception" reporting pack which quite frankly throws up stuff you would be blind not to spot, and if you relied on it you would probably really funk up anyones accounts.

Thanks (2)
Replying to ireallyshouldknowthisbut:
Danny Kent
By Viciuno
28th Jul 2023 12:42

ireallyshouldknowthisbut wrote:

' garbage in/garbage out system',

This was my gut reaction. Where is all this information coming from? Client bookkeeping? What is it reviewing? Bank statement lines, client reconciliations or invoices added to the systems? O something else entirely?

To be honest unless the underlying bookkeeping, or whatever the software checks, is being done by a competent person I would take anything the software pops out with a pinch of salt - not because of the software; but the data being fed to it is probably severely lacking in detail, misleading or just plain wrong.

The example of the dredging capital allowances, how/where would the software pick this up? Does this need to go to a dredging account on the bookkeeping software, or does the AI see a payment to a company that does dredging, and pick it up there? Most of our clients (and bookkeepers) would put this somewhere stupid like purchases, general or just somewhere fairly sensible like repairs - wouldn't surprise me to see this in contracting costs or even an asset additions code either.

If you know to separate it out somewhere, your likely to be aware of the allowances available and then the software isn't of much help.

I've no idea how the system works though, so this is pure speculation.

Thanks (0)
Replying to Viciuno:
Nick Stobbs
By NickStobbsToD
28th Jul 2023 18:20

Hi Viciuno, thanks for the read/comment. Agreed re bookkeeping data - if it was incomplete or inaccurate then you wouldn't get a correct answer from any decisioning technology. Our engines digest the TB, accounts, comp and CT600; they have had all the accounting/tax 'triage' and therefore are full of context which makes them reliable evidence for decisioning. In addition to this we enhance this 'source data' with third-party databases like Land Registry, etc. Interpretability, transparency and explainability are fundamental to ToD - therefore, you can see the decision we have arrived at and what evidence we have relied upon.

Thanks (0)
Replying to ireallyshouldknowthisbut:
Danny Kent
By Viciuno
28th Jul 2023 12:43

Also agree with the Xero reporting pack.

Doesn't really work, pretty useless, cumbersome to use and is missing a tonne of key features. Yet Xero keep on pushing it!

Thanks (0)
avatar
By jasonholden
28th Jul 2023 17:47

So, how does this actually compare to https://www.diagnostax.co.uk/ a product already on the market and has been for many years now?

Thanks (0)
Replying to jasonholden:
Nick Stobbs
By NickStobbsToD
28th Jul 2023 18:14

Hi Jason, thanks for taking the time to read the article and comment. I have known Gwil for a number of years and you are right, Diagnostax has been on the market for a while - and is a good solution. There is one key point of difference; Tod is a fully automated process (data collection, decisioning and identification) that takes <10 seconds to review the entire client base.

Thanks (1)
Replying to NickStobbsToD:
avatar
By jasonholden
28th Jul 2023 18:24

I assume it requires online bookkeeping software and therefore it needs to be very well maintained to be of use?

Thanks (0)
Replying to jasonholden:
Nick Stobbs
By NickStobbsToD
28th Jul 2023 18:37

Our first public release looks at pre/post year-end tax planning opportunities and 'anytime' non-tax planning opportunities - like grants, etc. The engines digest the TB, accounts, comp and CT600 from accounts/tax production software. As part of our roadmap we're exploring data/evidence from bookkeeping systems and open banking.

Thanks (0)
Replying to NickStobbsToD:
avatar
By jasonholden
28th Jul 2023 18:50

So, we use TaxCalc are you saying it links with TC, that would be a surprise as they always seem to guard their API.

Thanks (0)
Replying to jasonholden:
Nick Stobbs
By NickStobbsToD
28th Jul 2023 19:21

We're software agnostic - have messaged you.

Thanks (0)
ALISK
By atleastisoundknowledgable...
12th Aug 2023 12:45

Im slightly confused.
If this only looks at YE accounts& CT, then it only checks once a year for tax issues to be reviewed?
I can see how something that integrated bookkeeping as well as YE would be good for flagging things, especially if it also dredged the internet (CoHo SIC codes, client’s own website etc) to check what sort of client it was eg are they likely to be doing R&D work.

Thanks (0)