uk indirect tax conference 2015 power of data · 2019-10-25 · uk indirect tax conference 2015...
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UK Indirect Tax Conference 2015Power of data
Jilly McCullagh
Giuseppe Ciampa
11 November 2015
Trends in data
2
Technology in Tax
Looking forward – the future trends in technology
3
"Everything that can be invented has
been invented”
Charles Holland Duell c1899
US Commissioner of PatentsThomas Watson 1943
President of IBM
“When we set the upper limit of PC-DOS at 640K, we thought nobody
would ever need that much memory”Bill Gates
Chairman and CEO of Microsoft
“We always overestimate the change that will occur in the next 2 years and
underestimate the change that will occur in the next 10…..
….. Don’t let yourself be lulled into inaction”
Bill Gates
Chairman and CEO of Microsoft
Technology in Tax
Looking forward – the future trends in technology
Evolution of Tax Services
Evolution of IT in tax services
Bespoke Standardised Systematised Packaged Commoditised
Evolution of Tax Services
Evolution of IT in tax services
Bespoke Standardised Systematised Packaged Commoditised
1960s
• handcrafted
• ledgers
• manual typewriters
Evolution of Tax Services
Evolution of IT in tax services
Bespoke Standardised Systematised Packaged Commoditised
1970s
• electric typewriters
• photocopiers
Evolution of Tax Services
Evolution of IT in tax services
Bespoke Standardised Systematised Packaged Commoditised
1980s
• spreadsheets
• internal software
• Emerging desktop apps
Evolution of Tax Services
Evolution of IT in tax services
Bespoke Standardised Systematised Packaged Commoditised
1990+
• Software licensed to clients
• Multiple solutions
• Integration
• Moves towards enterprise solutions
Evolution of Tax Services
Evolution of IT in tax services
Bespoke Standardised Systematised Packaged Commoditised
2015+
• Data analytics
• AI
Evolution of Tax Services
Evolution of IT in tax services
Bespoke Standardised Systematised Packaged Commoditised
Commodity
pricing, tending
towards zero
Marginal costs of delivery reduces
Market & Trends in Tax
12
Data Volumes & Technology Capacity – Global data volumes continue to grow exponentially
and technology has had to keep up with the demand to digest this data.
Regulations – Regulators are demanding deeper insight into risk, exposure, and public
responsiveness from financial, health care, and many other sectors requiring integrated data
across the enterprise.
Technology accessibility – powerful data mining and analysis software is becoming common
place in a business’s finance operations (e.g. deployment of third party software such as Tableau
and Qlikview)
New Data Signals – New data sources have led to data enrichment. Technology has needed to
find ways to access and interpret this data to support operational insight and decision-making.
Clearer Insight – Technology has improved data reporting to go from raw spreadsheet outputs to
intelligent dashboard visualisation and scenario building.
Why the need for Data Management is growing
A number of internal and external factors have led to a growing trend to adopt
business analytics.
Market thoughts
Compliance focus
Relative importance of factors in %
Current global compliance drivers for organisations and their management
* Global CRS Transformation survey conducted by Deloitte – December 2014
Record to Report – the data challenge
Tax technology landscape
Tax department
18
The role of the VAT function
EffectiveData
Management
Greater focus on compliance
Increased e-audit activity
Increased interest in absolute VAT savings
Ability to identify and track risk
Increasing automation and standardisation
Adopting technology from wider Group Finance
Expectations for accurate compliance and self governance has increased
tax functions accountability and ownership role
Tax functions are looking at delivering value added operations rather than
just being a cost function to the business
What is the expectation on tax functions?
Old world New world
• Tax authorities accept a reactive
approach to the management and
resolution of tax risks
• Singular focus on pushing down effective
tax rate
• Little or no input into business IT
strategy, frustration with data quality
• Significant potential for reputational damage
and/or penalties if tax risks are not identified,
evaluated and disclosed in real-time
• Seeing tax-related data as an asset and
unlocking hidden value and insights
• Responding to the march towards data
conformity in the regulatory environment
The Process
Data Collection & Validation
• Significant number of information sources and manual intensive process
People & Knowledge
• Finding the right balance between technical expertise, management and tools
Technology Trends
• Differing views on how much integration with the source financial systems is
needed and no solution does it all yet
Tax authorities
Regulatory environment
In the U.S., strict requirements have been
enacted to identify potential weaknesses
of tax processes
In Europe, the trends are more to move to e-audits and deliver a standard audit file for tax to the authorities;
• UK – senior accounting officer
• NL – tax control framework
• Germany – standard audit file for tax e-audit
In Australia, since 2010 large businesses have been assigned a risk
rating by the Australian Tax Office. The risk rating was derived from extending and enhancing data
analytics and risk profiling techniques
In China, new regulations require large taxpayers to grant the tax authorities increased access to their internal tax risk control
systems
In India, the strategy seems to be having more audit-based controls opposed to
physical controls. Relaxation of controls is coupled with introduction of strict
penalty provisions including provision for prosecution.
In Brazil – elimination of the filing of corporate tax returns beginning in 2014 due to large amounts of required data that the Brazilian Tax Authorities
already maintain.
Delivering a strategy
Tax Technology maturity model
Traditional
Use of multiple basic
accounting systems. No
strategic focus on
streamlining data flows
Unlinked tools (no
integration or
automation)
Reliant on general office
productivity tools
(Microsoft Excel and
Microsoft Word).
Data is provided by
other teams with limited
control over its
provenance. Quite often
there are quality gaps
that repeatedly cause
problems at busy times.
Developing
Moves towards ERP
platforms and some
data flow analysis and
efficiency evaluation
Unlinked tools (no
integration or
automation)
Fit-for-purpose software
packages matched to
tax processes, with
limited interconnectivity.
Hobbyist use of
analytics tools.
Data is provided by
other teams according
to clearly defined
requirements . There is
a plan to address any
quality gaps.
Advanced
Single instances of one
of the main ERP
platforms (SAP, Oracle).
Shared service Centres
(SSC) in use
Some integration or
automation on specific
and basic data flows
Fit-for-purpose,
interconnected software
packages. Trained users
of analytics tools e.g.
Tableau.
Data is obtained
collaboratively with other
teams, addressing a
shared ongoing
objective to keep the
data quality at a
consistent level.
Progressive
Single instances of one
of the main ERP
platforms (SAP, Oracle).
SSCs in place, strong
data management.
Full automation on
specific and basic data
flows
Fit-for-purpose,
interconnected software
packages. Advanced
analytics tools and
techniques in use, e.g.
PowerPivot, SQL
Server, BI platforms.
Data is obtained by an
efficient process,
monitored on an
ongoing basis to identify
improvements and how
to act on other insights
the data provides.
IT and data
strategy
Automation
Software
tools and
skills
Analytics
engagement
continuum of
sophistication
market majority market leaders
Where data sits in a VAT compliance process
Processes
• Important to recognise what ‘compliance’
encompasses
• Preparing the return is a single step in the
cycle
• Tracking data process will surface pain
points that need to be addressed
• We’re becoming more adept at segmenting
and aligning steps across processes
• Styles of process improvement look
different across businesses but key steps
are often common
Finding the right balance to build a culture of
insight-based decision making
What makes analytics successful?
Right Questions:Asking the pertinent questions -
‘Where to Play’ and ‘How to Win’.
Practical
Questions Capabilities
Action
Model
Right Capabilities:Analytical, technical, and creative
skills need to be ‘fit-for-purpose’.
Best embedded through:
• tools and coaching
• leadership provocation
• incentives
Right Action Model:Action Model - the way the organisation is
designed to act on insight:
• Smart execution
• Strategy-first
• Leading on insight
Quality* decisions based
on actionable insight
* NB: ‘Quality’ = Fast, Efficient and Effective
Live demo
Concluding thoughts
29
Consider VAT’s position within the wider businessConsider VAT’s position within the wider business
Identify your key stakeholders and determine how to work with themIdentify your key stakeholders and determine how to work with them
Take stock of what technology solutions are already available: you may have more to play with than you expectTake stock of what technology solutions are already available: you may have more to play with than you expect
Focus on complementing and improving current processesrather than disrupting themFocus on complementing and improving current processesrather than disrupting them
Don’t overcomplicate things: it puts adoption of change at riskDon’t overcomplicate things: it puts adoption of change at risk
Technology is not a ‘silver bullet’. Sustainable improvement takes careand effortTechnology is not a ‘silver bullet’. Sustainable improvement takes careand effort
There’s more than one route to ‘best in class’There’s more than one route to ‘best in class’
Executing your strategy
Q&A
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