COVID-19 has accelerated tech investment across all industry sectors, with the finance and tax sector being no exception. As organisations move into strategic planning mode, the UK government has jumped on the bandwagon to improve tax processes. Accounting teams will now need the perfect blend of human expertise and technology to build business efficiency, argues Russell Gammon.
In light of the Great Resignation and the broadening digital skills gap, it’s important to consider how this defines the roles of the next generation of UK tax industry workers and what skills might be required.
A recent ACCA report highlights that digital skills are creeping into job specs, which could include Enterprise Resource Planning (ERP) and Artificial Intelligence (AI) among other technologies, which up until now were more at home in the tech team.
It is important to understand how the industry changes will define the role of the tax professional and the approach required by HR and hiring managers to meet workers’ needs.
Making Tax Digital (MTD) – the evolving tax industry
The impending transformation in tax administration has created an urgency in tech investment, with speed, efficiency, and accuracy being the main drivers behind HMRC’s ‘Making Tax Digital’ (MTD) scheme. Organisations are now sitting up and listening to get their tax right, in particular as harsher consequences are set to be handed out for inaccurate and late filing, such as the introduction of a new points-based penalty system for VAT returns.
MTD for Corporation Tax (CT) introduces the requirement to sharpen up CT processes, making it a necessityto file quarterly, in addition to the existing annual filing. Given the new quarterly requirement, a closer interaction between VAT and CT tax data is needed. Changes in source data will need to be reflected in both CT and VAT in quick succession, to ensure consistency in the figures being filed to HMRC.
To be truly effective, this process relies on shared data. A lack of current integration between VAT and CT tax teams is creating operational inefficiencies and poor customer service. In particular, with MTD for CT and VAT filings set to be only five days apart, insight across the entire tax team is vital to avoid processing in silos and arriving at different figures. As per HMRC’s proposed changes, the industry is set to become data-driven.
Employment challenges for corporates
Under the pressure of a higher workload of more regular filings and a tighter budget, tax departments realise they must embrace technology, replacing time-consuming administrative work with automation, to be more customer-focused. Whilst spreadsheet “experts” are still needed, tools like ERP, blockchain, analytics and data visualisation are ranking as key skills. According to a recent survey by ACCA, 89 percent of accounting and finance professionals said that digital skills were necessary in their industry.
Areas that will benefit from automation include:
- Data collection with MTD software, to minimise errors in manual data inputs.
- Data extraction to reduce time spent transferring source documents to the tax software.
- Data validation to reduce time spent on manual checks and spot errors.
- Data integration.
Existing tax teams will therefore need to adapt and upskill, particularly in interpreting data. Corporates are no longer just looking for tax professionals with remarkable accounting skills – the brief now includes digital skills and even AI expertise to handle evolving tax requirements. But securing and retaining workers with the right skills means delivering an employment package which promises new elements, including a challenging work environment and work-life balance.
The impact of Gen Z workers
Typical work for junior tax workers has also changed. While junior staff used to be content doing manual data entry jobs, there is now an expectation to be trained from day 1, enabling faster career progression. Previously, it was not unusual for skilled workers with around five years’ experience (and various qualifications) to be doing basic spreadsheet work too. With the prospect of technology replacing such menial tasks, managers could redeploy these highly skilled tax advisors to add value to the business.
The UK’s newest generation of workers, the digitally-native Generation Z (born between 1997 and mid-2000s) are also shaping the role of the tax worker. They expect more than just a salary – they’re more aware of social and environmental causes, they want flexible working, a good work-life balance, and support from their employer with mental health and wellbeing. They are prepared to work hard for a business which shares their values. Graduates like a continual challenge and to be given interesting and non-repetitive work. But as they are more discerning about prospective roles, this reduces the pool of qualified candidates – and those employers who don’t live by their values risk being passed over or ditched for another.
Recruiting the tax worker of the future
While the balance of tech and human expertise may take time to get right, tech is continually propelling the industry forwards. What the digital accountant looks like and how to recruit and retain them is the next big challenge. Tax recruiters will need to step outside of their comfort zone and provide additional benefits – and an increased salary never hurts. This will help to prevent their recruits being poached by larger tech-driven enterprises where their skills in AI will be nurtured and well-rewarded.
Hiring managers must now seek out workers with a unique combination of skills: accounting, business, and digital. The tax pro of the future will need to be fluent in data analytics and tax rules, as well as being adept at using real-time tax dashboards and visualisation techniques. Keeping abreast of the technologies required for various roles will be critical.
With this approach, tax workers will be empowered by technology and have greater insight into their clients’ accounts, which in turn will boost their productivity. When combined with more clearly signposted career progression, this will make it easier for employers to build loyalty with their workers. As tax employers are carried on a wave of digitalisation, HR and hiring managers will have to adapt their approaches to find the right skills and deliver digital innovation in the tax industry.
Russell Gammon is the Chief Solutions Officer at Tax Systems.