How Technology is Revolutionising the Tax Landscape?
Regardless of which area of the accountancy profession you may have been involved in over the last few years or simply the last few weeks, it’s undeniable that technology is having a big impact on the profession. This is arguably most evident in Tax relative to other domains. With tax compliance widening and tax professionals being expected to generate the same standard of work at a much quicker frequency, being on the wrong side of this revolution can spell financial distress for your business.
The push towards technology has, surprisingly, been driven by the regulators and tax authorities including HMRC. Whether that’s MTD (Making Tax Digital) VAT which has been in force since 2019 for all businesses with taxable turnover above £85,000 and whose business activities weren’t deemed to be wholly exempt for VAT purposes. There were some exceptions which were granted by HMRC such as in areas where MTD may be impractical or cause undue hardship for multiple reasons including businesses in areas with extremely poor connectivity, age-related reasons and-believe it or not-for those whose religion prohibits use of electronics amongst others.
MTD ITSA (implementation now delayed until 2026) and the use of iXBRL are some other examples of how regulators and HMRC want businesses to digitize their records. Doing so enables HMRC to gain foresight given that the data is submitted quicker and at more regular intervals whilst also having the potential to be disaggregated which works in HMRC’s favour. By having more regular access to granular data, HMRC is able to collect tax sooner which accelerates the rate of inflow of funds into the public purse. Another benefit to HMRC is the potential to deploy data analytics to identify any anomalies or areas requiring special attention in either individual or company tax returns which may be missed by the human eye. Given the volume of tax information received, such procedures can address attention to those areas most likely to result in additional tax being received thereby improving economic efficiency which is one of the objectives of a well-functioning taxation system.
Businesses can look at this revolution as a compliance burden or an opportunity. Those that are part of the latter will reap considerable rewards. This consists of being able to reliably forecast taxable profits in advance to understand likely tax liabilities to be paid or how the liability can be reduced by investment in non-current assets which avail capital allowances or undertaking other business expenditure. It is important for accountants to upskill themselves to meet their ever-expanding obligations, but this mustn’t be done alone.
Having an ecosystem of partners including cloud-accounting providers and business management software will reduce the reliance on the business to be the only one investing in ameliorating its systems. Partners who benefit from the shift to digital incentivizes them to undertake investment too which mitigates cash flow burdens on SMEs to some extent. At Cheylesmore Chartered Accountants, our host of partners ranging from Xero to Dext enable us to constantly meet our clients’ requirements in a timely manner and delivering the level of satisfaction that they expect of us.
Looking to build a clear roadmap to successfully achieve your tax compliance journey? Want your business to have a long-term vision and ability to meet external regulatory changes beforehand through a proactive rather than reactive approach? Then contact Cheylesmore Chartered Accountants today either via a free 15-minute discovery call or booking a 60-minute meeting with one of our partners. We will analyse your business and tailor a package that meets your company's requirements because no 2 clients are the same. We grow as you grow with your success being our success, so you know we’re going to pull out all the stops to give you the best experience possible.
