By Russell Gammon, Chief Solutions Officer, Tax Systems
2022 has been an exciting and transformative year for the tax industry. From the most recent compliance deadline for Making Tax Digital (MTD) for VAT to the widespread adoption of new technologies, the sector has certainly forever changed in the past 12 months. So, as we reach the end of this year, the question is, what’s next?
Out with the old, in with the new
Throughout this year, we have seen large financial institutions turn to technology and automation. Previously reluctant to change, and often cautious of new technologies due to the perceived risk to the highly sensitive data they hold, these companies have taken the leap and embraced big data analytics, artificial intelligence, and machine learning to identify trends and remain compliant. As we enter 2023, we will see this develop further – more and more organisations will migrate to the cloud and automate processes in order to reap the benefits that the larger financial institutions are experiencing. 2023 could be a defining year for the tax industry with departments set to spend more on cloud than desktop technology for the very first time.
This will be crucial over the next 12 months, as businesses cope with soaring prices and reduced budgets. Although many businesses currently outsource their tax functions, we have seen double-digit price rises from some outsourcers, meaning that, in some cases, bringing these tasks back in-house may start looking like an attractive option. Yet, a lot of departments will struggle to accommodate extra tasks with their existing resources. A solution that is likely to rise in popularity over the next year (and beyond) is co-sourcing, allowing advisors to use a company’s technology to enable them to work together, rather than a full outsourcing service.
Cloud technology is a huge part of this and is essential to its success. Migrating finance and tax functions to the cloud enables access to real-time information and allows for seamless collaboration. Rather than the typical siloed approach, which generates multiple copies of documents, cloud-based solutions allow everyone to work on the same version, removing the possibility of inaccuracies and missed contributions.
Similarly, in order to reduce the burden on workforces, many tax departments will continue to adopt automation technologies to complete the mundane, repetitive tasks. The use of Robotic Process Automation (RPA), Artificial Intelligence (AI), and Machine Learning (ML) will become commonplace as organisations start to recognise the benefits of freeing up their talent from the repetitive data input tasks and reallocate their time and skills on more value-adding tasks for the business.
Making tax less taxing
With this widespread adoption of new technologies, organisations are going to require knowledge within their business of how to utilise and get the most out of their investment. Yet, with demand for these skills so high, the supply of these professionals is being stripped as they are recruited at speed. While the volume of new tax talent graduating from universities is not necessarily decreasing, we are not seeing the influx needed to match the high demand.
This has generated a so-called ‘war for talent’ as every organisation fights to recruit these skills from the limited talent pool. However, this is not sustainable in the long term. 2023 should, therefore, be dedicated to encouraging more people into the industry and equipping it for the future.
The move to the cloud and adoption of new technologies is certainly a step in the right direction to achieve this. People don’t want to spend 8 hours a day inputting data into a spreadsheet and they shouldn’t have to when technology can automate such tasks. This should then free up time to focus on value-add tasks that better utilise the skills that tax professionals trained for years to gain. Areas such as data analytics and data science are increasingly becoming key aspects of the tax industry and are significantly more interesting. A digital transformation could revolutionise how graduates view the tax industry and encourage the influx of new talent that is desperately needed.
A digital revolution
Agility is going to be essential over the next 12 months but, by embracing new technologies, organisations will put themselves in good stead for whatever 2023 throws their way. For some departments that have been reluctant to change over the past few years, this may require a behavioural shift alongside digital transformation. Automation and collaborative cloud-based systems are vital to achieve this and stay afloat in the current climate. Let’s make 2023 the year of the digital revolution in the tax industry and future-proof our departments for whatever may lie in the years ahead.