Just three years ago, 60% of businesses expressed a clear preference for desktop tax applications over cloud-based solutions. Fast forward to today and it’s a very different story with organisations looking to transform their tax functions and take advantage of new cloud-powered capabilities.
Traditionally risk-averse, the tax sector has undergone a rapid rethink of initial attitudes to cloud-based systems. This move has been prompted in part by the rapid rollout of real-time digital tax environments by tax authorities around the globe.
Confronted by new digital and data-intensive reporting requirements, more organisations are opting to adopt specialist cloud-based tax software that enables them to meet these demands and stay compliant.
Let’s take a deeper look at what’s driving this shift.
Counting the gains
Previously dependent on fragmented desktop systems that rarely worked together seamlessly, today’s tax leaders need to eliminate manual processes and make data more accessible, integrated, and easier to manage, use and analyse.
Doing so will not only enable timely and accurate tax reporting but will also support the creation of truly flexible tax operations that can be rapidly adapted to the evolving Making Tax Digital (MTD) demands of HMRC, and the granular reporting expectations of other global tax authorities.
Today’s cloud-based tax systems help towards eliminating the productivity-sapping manual data entry and reconciliation tasks that eat up significant time and resources and introduce the opportunity for errors. Eliminating these factors enables fully collaborative working between different organisations and locations by making it easy to integrate best-of-breed solutions.
An automated tax solution that maintains compliance while helping organisations increase efficiency and reduce operational risk is just one of the benefits for senior tax decision-makers.
Cloud applications are also key for enabling the frictionless workflows and collaborative hand-offs that underpin the efficient outsourcing of selected tasks to value-add external advisors and releasing in-house tax experts to focus on higher priority tasks.
Organisations can confidently engage in these increasingly popular co-sourcing strategies, utilising their cloud platform to control and manage the end-to-end compliance cycle.
Evaluating wider operational considerations, cloud software as a service significantly reduces the IT burden on organisations. Scalable in line with changing needs and with flexible pay-as-you-go models, it can be deployed at speed with ongoing maintenance, patches and updates, all efficiently managed by the vendor rather than the customer.
Similarly, negating any need for physical servers, the cloud enables organisations to accelerate their sustainability objectives. Back in 2018, a study revealed how using the Microsoft Azure cloud platform was 93% more energy efficient and 98% more carbon efficient than on-premises solutions.
Designed to be rolled out remotely, cloud software also features built-in training and user support robots that make programmes easier to use and understand.
Changing mindsets
The highly regulated nature of tax means that compliance with data standards is a top concern for many decision makers. However, since many cloud vendors are required by their customers to be certified with standards such as ISO 27001, concerns relating to data compliance and governance have been mostly allayed.
While digital tax application vendors are responsible for securing their customers’ data and using best of breed security as standard, organisations must still ensure they are fully compliant with any digital and information security requirements contained within regulations, such as GDPR.
But the compliance standards, and regulatory bodies’ tough stance on upholding them, has led to a growth in trust when it comes to migrating to the cloud.
A further development that has helped boost cloud adoption has been the arrival of the digitally savvy Gen Z tranche of workers who are confident and receptive to new and proven technologies that enhance how they work.
As a consequence, tax teams are developing their skill sets and implementing new workforce models that feature a growing number of ‘tax tech’ roles. The aim of the game is to prepare the way for harnessing technologies like robotic process automation and AI in a highly effective and applied way.
AI – opening the door to change
Cloud is a key component in enabling tax teams to take advantage of innovations that are difficult to harness using desktop software, like generative AI.
Capable of processing huge swathes of data at high speed, generative AI can handle repetitive rule-based tasks like tax coding queries and generate comprehensive reports on complex data sets. Alongside streamlining the analytics process itself, generative AI can deliver deeper data insights and use powerful visualisations to make these accessible and understandable for a wide range of stakeholders.
By redefining the world of data analysis and eliminating much of the grunt work, generative AI enables tax professionals to focus their skills and know-how in new value-add ways. For example, spending more time analysing the AI’s findings and strategically applying their knowledge.
Generative AI is also being used to guide and support tax professionals as they navigate complex responsibilities. Acting as a research assistant that undertakes all the heavy lifting, generative AI frees up team members to focus on these more nuanced tasks.
