Just like your car, boiler and favourite watch, best practice demands that your tax solution should also be booked in for a regular service.
As with any wearable component, even the latest and greatest tax solution will slowly become outdated or inefficient if left untouched.
Of course, providing it’s built and implemented by experts, the actual technology that comprises your solution will last a lifetime. But it’s the data that feeds into it that is at immense risk of expiring – sometimes in a matter of days or weeks.
Why is tax likely to become quickly outdated?
Let me ask you a question: What links Northern Ireland, Malaysia, the Covid pandemic and a global economic downturn?
The answer is they have all been responsible for businesses having to urgently update their global tax solutions in recent weeks.
Last month’s Northern Ireland Protocol was the latest in a lengthy list of legislative updates made in relation to Brexit since 2020, while Covid continues to drive dozens of rate changes around the world every month and Malaysia is reportedly considering the reinstatement of GST having opted to abolish it only five years ago.
And that’s just three examples. There are hundreds more every single week from all four corners of the globe.
Indirect taxes like VAT, GST and Sales & Use Tax are routinely leveraged by governments to combat the latest economic woes or to capitalise on a period of prosperity, resulting in new rates, rules and regulations being introduced every day.
That’s why, if you fail to service your tax setup, it’ll soon be full of outdated tax content that will inevitably lead you down a path towards inaccurate calculations and non-compliant reporting.
How to maintain a tax solution
Maintaining a tax solution can be a burden for even the largest and most successful businesses.
Do you have the skills in-house to update rates, add new rules and ensure compliance with impending regulations? Do you have Oracle, SAP or Workday specialists in your team to work on your ERP? Do your people have the required knowledge of each jurisdiction in which you’re trading?
If the answer to any of these questions is ‘no’, you’re probably not cut out to service your setup and enjoy the peace of mind that only comes from knowing every last update and tweak has been made.
What’s more, even if your business does have the resources and ability to maintain your own tax solution, there is often an internal debate to be had over which department is responsible for it.
“Is it the tax team’s job? Or is it IT’s?”
Sound familiar? Well, in my opinion, it’s down to both teams to work together. But how do you do that? Is it even realistic?
Tax control frameworks can be created to manage the impact of required changes, along with control and visibility of the current status quo. The IT element is always more ambiguous and difficult to implement.
What can businesses do to protect themselves?
Always remember that tax solutions are now managed globally. That means there is only one reporting function and one source of truth. There’s no way of avoiding accountability.
If you’re going to maintain – or service – your tax solution in-house, be sure that you have the skills, experience, expertise and time to do so. It’s a monstrous challenge.
That’s why most large businesses these days have a regular plan in place, such as the Support & Maintenance service offered by us and administered by the experts working on our Support Desk.
Take the recent Brexit changes as an example. Clients using our Support & Maintenance would have started that process from a strong position as their tax engine would already have been in fine fettle – and as soon as changes detailed within the Northern Ireland Protocol emerged, we will simply ‘make them happen’ so a solution is immediately up-to-date and there is no detraction from the wider issue of compliance.
I know from recent conversations that some businesses not currently using a support service react in a more chaotic fashion.
“Who set up our Brexit rules last time?”
“Get them back in.”
“Why was this agreed?”
“What made us set that up?”
All remain surprisingly common responses when a major regulatory update is revealed and needs to be updated within a tax solution.
And just as when a car won’t start or a boiler breaks down, I always respond in the same way: “Why didn’t you have it serviced?”