By Tom Birch, Indirect Tax Reporting and Strategy Lead, PwC UK
The speed at which data is changing the way tax operates makes the strategy around it central to modernising processes and redefining the role of tax within any business.
Data and analytics is the top technology investment priority for UK business leaders, according to PwC's 26th Annual CEO Survey. In relation to tax specifically, the 300 business decision makers we interviewed for our Reframing tax study see data management and governance as the primary driver of tax tech investment.
Just as good data can make any tax team's job easier and more efficient, incomplete or substandard information can hold up transformation and undermine tax solutions. The big issue is tax teams often have little direct control over the data coming in from finance, sales, logistics and other parts of the business.
In theory, this shouldn’t be a problem. Tax can have an important and influential role up-front across the whole data strategy - setting and monitoring supply agreements and quality criteria for the data supplied by the business. In practice, there are frequent gaps, errors and inconsistencies in the inputs, but little incentive for business teams to sort out the issues at source. As a result, tax teams spend far too much of their time cleansing, compensating and manipulating the base data.
Sorting out these data sourcing issues once and for all would make tax teams much more productive – enabling a human-led, tech powered approach that frees up time to support the business and deal with incoming tax changes, while enhancing the quality of data-enabled business insight and support. The good news is that we now have a window of opportunity to do just that, with both carrots and sticks to make it happen.
Digitisation and automation are providing an important catalyst for overhauling data management, not just within tax but across the business.
In turn, the real-time reporting of transactional data as part of the move to making tax digital across the world is forcing business teams to strengthen the quality and control of tax-sensitive data and processes. With tax authorities checking for errors and omissions, businesses increasingly won’t be able to issue invoices until they comply. With the resulting ability to collect revenue at risk of being delayed, the business has a clear incentive to fix any tax data issues quickly rather than leaving it to tax teams to deal with them.
The business case for ‘right first time’ data management is equally strong. For example, the relocation of a production facility may look good in terms of skills and supply times, but could be uneconomic because of the tax costs. Timely and reliable data would allow tax teams to alert boards to these and other strategic risks.
How can you make the most of the opportunity to put tax data management on a firm footing? For us, five priorities stand out:
Reach out to business teams and make sure tax teams are inputting into key decisions on enterprise-wide automation and digitisation from the outset. This includes ensuring the specifications for a new finance, sales or logistics system take full account of the tax data that needs to come off it. If you wait for tax teams to be consulted, you could find that it’s too late.
This article is one of a series designed to help those responsible for tax navigate their transformation journey. If you have any questions or would like to know more about redefining the role of tax in your business, please get in touch.
Understanding your starting point is critical to finding the right way forward. Use our interactive tool to assess where you are on your journey to being human-led, tech-powered and access further content to help deliver greater business benefits.
Tax: we all know it can be complex. But what’s the best way to deal with that complexity? At PwC, we’ll ask you about your organisation’s aims so we can help you achieve them. We’ll listen to your tax issues and find the best ways to resolve them. Whatever the size of your business, we’ll work together with you to help you manage your tax affairs.
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