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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 Compliance Systems: In- OR Out-source?

Wednesday, 16 October 2013

By Simon Godley

Many corporate groups regularly review how they process their corporate and indirect tax compliance, and whether they have the best IT systems or tax technology in place to cope with these crucial functions.  There is also the tax accounting function, requiring appropriate systems in place to handle the tax provisions side and its accuracy for the statutory and consolidated accounts.  This can also be a difficult area given that companies are required to follow complex guidelines set out under US & UK GAAP and IFRS, depending on their corporate structure.  For large complex companies, this requires much technical accounting expertise as well as adequate IT systems.

Many companies rely on heavily-laden Excel workbooks to compute these functions, which can lead to risks around accuracy with formula errors and omissions etc.  There are now more advanced software systems in the market that remove these risks, and can act as a central database point for all the numbers and data required for tax provisions and compliance.  Some software houses that focus on the accounting and tax compliance sector have been developing these systems for some time now, and these systems are now used by some of the larger UK and European groups.  However it sometimes requires a significant investment by these companies, both in terms of the acquisition of the technology and the lengthy time required to get it all working correctly.  Often these systems have to be set-up to fully configure with a group’s ERP system, which can lead to a very complex and lengthy project.  For some groups this will make a lot of sense and will work well for them in the long run, for others this will be a daunting prospect.

Some of the Big Four accounting firms have also developed specialised tax products that can help to automate the tax accounting process, mostly acting as a tax add-on module to a SAP or accounting system.
  
As an alternative, what are the options of outsourcing these functions, say to one of the Big Four consultancies or other accounting / tax practices?  The tax accounting and compliance function is then handled by the specialised tax firm, who already have advanced software technologies set-up.
 
Russell Gammon, a Manager within the Accounting & Tax Technology team at KPMG, is well qualified to give a view on this area, “More and more we are seeing firms looking to use dedicated solutions to streamline their tax reporting processes. Excel spreadsheets have a limited shelf-life and cannot reasonably be maintained in a business that experiences frequent change."

“Moreover, we see our clients gaining tangible value from using a software package, such as increased visibility on certain Deferred Tax Assets, or reduced audit work as less substantive testing is required. Overall, the market for tax reporting technology is an active one that will see more and more firms convert over the next couple of years.”

“In addition, we often support client outsourcing engagements using our proprietary software. Not only does this help streamline the process, but ensures that the results are consistent and have a full audit trail behind them. For example, we have seen several successes in recent months supporting Accounts Outsourcing engagements by utilising our accounts production tool, K-Trinity.”

So it would appear that for the mid-sized to large group companies, there are a number of routes away from the Excel spreadsheet approach for accounting and tax reporting, which may be proving cumbersome and error-prone.  There are clearly now many options for bringing in-house the appropriate tax technology for a business, with outsourcing also an option to avoid a possible lengthy and complex software implementations process.

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posted by Simon Godley

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