Reframing tax

Refining and rationalising your tax processes

Tax transformation provides an opportunity to scale back or shut down the operations that generate little or no value, and introduce and improve the ones that can make a difference to your business. Here, Kerstine Rencourt, Tax ERP and Data Lead, looks at how you can cut through to what really counts.

By Kerstine Rencourt, Tax ERP and Data Lead, PwC UK

Systems modernisation can sharpen efficiency, reduce manual errors and unlock valuable new insights. But you only have so much money to spend. That’s why it’s so important to prioritise investment targets and rationalise operations ready for change.

Many processes are carried out simply because they always have been. Transformation allows businesses to challenge the status quo, and as such, it needs a human-led, tech-powered approach. It's the chance to question whether it is still necessary before considering whether that action can be done smarter, faster and/or in a more cost-effective way.

Relying on your ingenuity and understanding to guide your choices, you might ask yourself, and your group of stakeholders, the following questions - and note any agreement or disagreement within the business:

Do we really need perfection when good enough would be absolutely fine?
Could we draw less material and complex monthly/quarterly data straight from our systems in real-time and just do reconciliations once a year?
Do we need dozens of people poring over routine filings in our European headquarters, when the most demanding aspects of tax management are being handled by a small and overstretched team in China?
Do tax professionals need to turn out routine data and analysis when this could as easily be carried out by someone else better qualified and at a lower cost?

Delivering more for less

Just as importantly, the shake-out would free up tax professionals to provide the strategic insight and advice boards and business teams so urgently need.

The biggest benefits of investing in tax technology and systems, according to the businesses who've invested in the last two years

Overcoming resistance to change

The problem is a lot of these unnecessary or overly elaborate processes have become entrenched. Resistance to change is clearly a factor in some cases, either because people feel their jobs may be at risk as a result or what they’ve been doing is no longer valued. To be successful, any transformation therefore needs to be sensitive to these feelings and show that what is to come is a gain rather than a loss.

There can also be more subtle issues. For example, if a territory CFO or Head of Tax doesn’t believe a centralised service centre is providing the support they need, they can begin to build a shadow tax organisation. Successful transformation therefore demands dialogue, ongoing evaluation and, most of all, trust.

The way forward

How can you make the most of the opportunity to rethink, reset and restart operations? For us, three priorities stand out:

Define change
Design change
Deliver change

Define change

By breaking down your tax operations into component parts, you can judge which processes should be stopped, which new ones need to start (such as additional business partnering), which ones should be shifted (or consolidated within a service centre) and which ones should be changed (for example, automated or simplified).

Given the pressure on budgets, a useful yardstick for evaluation is the ratio of resources to risk and opportunity. In many cases, the level of risk and opportunity won’t justify the amount of resources being committed - for example, the frequency of reconciliation or tax people doing what others could do more cheaply. But others might need more time and investment.

Design change

With processes defined, you can determine how each process can be delivered in the most efficient way. The solution may be moving the process to a shared or self-service operation. But a better answer could be fixing failing processes. This might mean, for example, those responsible for tax working with business teams to make sure they supply the right quality and consistency of data - rather than requiring tax hours of screening and cleansing.

The design stage is also the juncture to assess and address weaknesses. For example, if territory heads are creating ‘shadow tax teams’ that are duplicating shared service operations, how do the outsource and insourced services need to adjust to avoid this? Planning at the implementation stage is clearly an important part of this. As are Service User Satisfaction Surveys, which help ensure shared service teams are meeting demands.

Deliver change

People deliver change, not systems. Without buy-in from your people, there will be no progress.

From a process perspective, it’s therefore important to think about what motivates your people and find out how they view their defining goals. Instilling any major change is likely to require a shift in their mindsets: from delivering annual schedules of prescribed tasks, to realising their purpose and place in the wider business strategy.

The other big priority is permission. When people are wary of change, it’s important to assure them they have a clear go-ahead to do things differently (for example, when good enough really is good enough, and there is no need to work towards painstaking perfection). This is why leadership and communication is so critical.

More from us

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.

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