How has tax digitisation helped UK businesses?
Businesses across various industries are benefitting from digitisation in multiple forms and are taking advantage of ever-developing technologies. And with the Government’s digital strategy paving the way for more businesses to transform and become resilient in competitive markets, an increasing number of companies are getting involved.
Tax departments have already expanded into digitisation with businesses harnessing the digital transformation of their tax records. This has also dramatically changed the way tax is reported and paid to HMRC.
Tax digitisation has offered many benefits to businesses including:
Digital methods to report and submit tax data have resulted in reduced errors. Without the risk of human mistakes, there has been a positive impact with the use of tax determination, leading to increased accuracy across transactions. In turn, this has provided a better overview for businesses with regards to indirect tax implications such as VAT.
Time and cost
Businesses are making huge savings on both time and cost. With less time needing to be allocated to tax paperwork, resources can be utilised elsewhere, improving the efficiency of the business. It can also help businesses see where they could be making tax savings, helping them invest in the right resources and assisting growth.
Collecting data and calculating tax costs takes up a great amount of time when done traditionally, but digitising these aspects can speed up the process enormously.
Review time can also be reduced as digital input methods mean there is less need for double-checking before submitting the information.
Greater transparency is easily achieved through digitisation. The storage of data in one place makes it easy to cross-check reports and summaries, which leads to increased compliance. This, in return, can reduce the need for audits, taking the pressure off finance teams.
As companies move towards a future where digital tax reporting is mandatory, it makes sense to shift to a complete digitisation process. However, ensuring all businesses accept the digital transformation of tax reporting is likely to be a challenge, particularly for older companies that have been trading for some time.
With technology moving at such a fast pace, many will no doubt be concerned about a potential loss or change in their job roles. Others will lack the necessary skills to move to a digital way of working, while others may be reluctant to change old systems.
Educating businesses in this area is essential and it’s imperative for all companies to gain access to training resources.
However, it’s clear to see that, once the challenges have been addressed, the benefits will outweigh the drawbacks. Tax digitisation will help reshape the future of businesses and the UK economy for the greater good.