UK Indirect Tax Conference 2015 Power of data

Transcription

1 UK Indirect Tax Conference 2015 Power of data Jilly McCullagh Giuseppe Ciampa 11 November 2015

2 Trends in data 2

3 Technology in Tax Looking forward the future trends in technology "Everything that can be invented has been invented Charles Holland Duell c1899 US Commissioner of Patents Thomas 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 3

4 Technology in Tax Looking forward the future trends in technology We always overestimate the change that will occur in the next 2 years and underestimate the change that will occur in the next Don t let yourself be lulled into inaction Bill Gates Chairman and CEO of Microsoft

5 Evolution of Tax Services Evolution of IT in tax services Bespoke Standardised Systematised Packaged Commoditised

6 Evolution of Tax Services Evolution of IT in tax services Bespoke Standardised Systematised Packaged Commoditised 1960s handcrafted ledgers manual typewriters

7 Evolution of Tax Services Evolution of IT in tax services Bespoke Standardised Systematised Packaged Commoditised 1970s electric typewriters photocopiers

8 Evolution of Tax Services Evolution of IT in tax services Bespoke Standardised Systematised Packaged Commoditised 1980s spreadsheets internal software Emerging desktop apps

9 Evolution of Tax Services Evolution of IT in tax services Bespoke Standardised Systematised Packaged Commoditised Software licensed to clients Multiple solutions Integration Moves towards enterprise solutions

10 Evolution of Tax Services Evolution of IT in tax services Bespoke Standardised Systematised Packaged Commoditised Data analytics AI

11 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

12 Market & Trends in Tax 12

13 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. 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.

14 Market thoughts

15 Compliance focus Current global compliance drivers for organisations and their management Relative importance of factors in % * Global CRS Transformation survey conducted by Deloitte December 2014

16 Record to Report the data challenge

17 Tax technology landscape

18 Tax department 18

19 The role of the VAT function Greater focus on compliance Ability to identify and track risk Increased e-audit activity Effective Data Management Increasing automation and standardisation Increased interest in absolute VAT savings Adopting technology from wider Group Finance

20 What is the expectation on tax functions? 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 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

21 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

22 Tax authorities

23 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 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. 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 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

24 Delivering a strategy

25 Tax Technology maturity model Traditional Developing Advanced Progressive IT and data strategy Use of multiple basic accounting systems. No strategic focus on streamlining data flows Moves towards ERP platforms and some data flow analysis and efficiency evaluation Single instances of one of the main ERP platforms (SAP, Oracle). Shared service Centres (SSC) in use Single instances of one of the main ERP platforms (SAP, Oracle). SSCs in place, strong data management. Automation Unlinked tools (no integration or automation) Unlinked tools (no integration or automation) Some integration or automation on specific and basic data flows Full automation on specific and basic data flows Software tools and skills Reliant on general office productivity tools (Microsoft Excel and Microsoft Word). Fit-for-purpose software packages matched to tax processes, with limited interconnectivity. Hobbyist use of analytics tools. Fit-for-purpose, interconnected software packages. Trained users of analytics tools e.g. Tableau. Fit-for-purpose, interconnected software packages. Advanced analytics tools and techniques in use, e.g. PowerPivot, SQL Server, BI platforms. Analytics engagement 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. Data is provided by other teams according to clearly defined requirements. There is a plan to address any quality gaps. Data is obtained collaboratively with other teams, addressing a shared ongoing objective to keep the data quality at a consistent level. 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. market majority continuum of sophistication market leaders

26 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

27 What makes analytics successful? Finding the right balance to build a culture of insight-based decision making Right Questions: Asking the pertinent questions - Where to Play and How to Win. Practical Questions Capabilities 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 Action Model Quality* decisions based on actionable insight * NB: Quality = Fast, Efficient and Effective

28 Live demo

29 Concluding thoughts 29

30 Executing your strategy Consider VAT s position within the wider business Identify 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 expect Focus on complementing and improving current processes rather than disrupting them Don t overcomplicate things: it puts adoption of change at risk Technology is not a silver bullet. Sustainable improvement takes care and effort There s more than one route to best in class

31 Q&A 2015 Deloitte LLP. All rights reserved. 31

32 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ( DTTL ), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of DTTL and its member firms. Deloitte LLP is the United Kingdom member firm of DTTL. This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication Deloitte LLP. All rights reserved. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Tel: +44 (0) Fax: +44 (0)