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About In House Tax

About In House Tax

This weblog is a news and views site for tax professionals within the UK and international in-house tax community.  You will find information about appointments and people moves in and around the in-house tax market, issues affecting the in-house tax professional, opinions on the state of the tax job market, updates on tax technology, and other general thoughts of the day.

Hope you find it useful.

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Location: St Albans, United Kingdom

This site has been developed by Simon Godley, who also runs the niche tax recruitment company Talentpool Selection . Simon spends a lot of his time placing tax specialists into FTSE companies, large in-bound groups and some professional services organisations. He also recruits and is well networked around the UK tax technology and VAT markets.

Tax News

Tax Technology update - industry view

Sunday, 2 December 2012

It is very clear that IT and technology is being further embraced by the tax world. 15 years ago, large UK based multinational groups would be either installing or upgrading software for tax computations and tax return production. They would be looking at the pros / cons of Abacus verses Alphatax for CT comps, or if they felt they didn’t need to invest in this type of software, they would use an older version of Excel for setting out a tax computation. Everyone was happy, job done!

Then in 2001-2002, we had the Enron catastrophe and a regulatory spotlight was quickly shone onto the accuracy and reliability of financial statements. CFOs and FDs soon realised that they had to have more integral, more accurate and more real-time accounting systems, leading to a boom in SAP, Oracle, JDE finance implementations. Tax continued to plod along as before, but then a more recent spotlight has been shone on internal tax processes of large companies because of Senior Accounting Officer rules and the insistence of iXBRL and e-filing. 

Also as we see in the current press cuttings, large international groups such as Starbucks and Google are under intense public scrutiny for allegedly not paying enough tax on their UK / European operations. Paying your taxes is becoming a stronger moral issue in a world of austerity.  Governments are placing much more regulation around areas such as tax reporting and transfer pricing. 

So corporate organisations now need to have more effective and transparent systems for collecting, calculating and reporting of tax information.  Relying on stand-alone Excel workbooks is not good enough anymore. There needs to be more modern interconnected IT systems procured for the tax accounting / forecasting process, VAT and indirect taxes, transfer pricing and employment taxes. A more streamlined end-to-end tax system.
So in the last few years, what has industry been doing on this? To what extent have they been upgrading their IT infrastructure and software for tax?

Bal Dobe, who has extensive experience of working in-house on tax compliance, tax planning and tax technology projects with large-end multinationals shares his views:

“I have a seen a whole range of technology solutions applied in the real world. At one end exists world class organisations where Tax, Accounting and Systems work in harmony with the Business producing excellent results. At the other end are organisations struggling to get to the starting line, let alone compete effectively.”

So for companies that have taken steps in enhancing their tax technology and processes, what results have they seen?

“Done in the right way, applying technology can produce quantum leap levels of improvement, such as time saved, superior results, lower risk of errors, and resources utilised more efficiently. Why would you have your highly trained, highly qualified tax resources doing tasks that can be automated at a fraction of the cost? Although technology must always be used to serve the tax function, and hence the business, and not be there to hinder the tax function’s performance.”

Clearly one issue within all this is cost, and significantly upgrading IT systems for tax could be a huge investment and it may be unclear as to identify or quantify the return on that investment.  But what's the cost of doing nothing?

Bal comments, “Organisations that don’t make changes to their technology could go on to experience all kinds of difficulties such as extensive audits, attention from the tax authorities and failure to perform in the market place.”

So it seems that some of the larger and more IT progressive organisations have taken a lead in implementing more connected systems between the business, accounting and tax.  However it also seems that the embracing of advanced technology for tax amongst industry is still very much work in progress.  

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posted by Simon Godley


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