Operational Resilience: How to deliver on your tax needs and remain resilient
May 15, 2020
As governments start the complex process of unwinding the lockdown, businesses are also grappling with the implications and consequences of coronavirus (COVID-19). Disruption has forced unparalleled change throughout entire organisations and though many tax teams are managing the situation well, this is not without significant operational challenges and pressures.
Over the past few weeks, we’ve been in conversation with Heads of Tax and business leaders, about their response to the current environment. Whilst the experience of each business is different, we’re noticing some commonalities in approach, specifically, prioritisation and adaptation. Not surprisingly, prioritisation is driven by business imperatives focusing on capacity (or key person dependencies), cost reduction (how are tax operations contributing to this), managing cash flow, and risk and quality (maintaining and managing tax authority relationships, protecting reputation and brand).
In addition to these internal demands, new external asks such as keeping up to speed with the rapidly evolving global tax landscape, are layered on top of business as usual. More is being asked of a stretched workforce and critical activities such as tax accounting, cash flow forecasting or compliance around Senior Accounting Officer, Corporate Criminal Offence and EU Mandatory Disclosure Regime, are not going away. Whilst globally tax authorities have made some welcome concessions to support business, these are not limitless. Tax functions need to work out how their operating model can be adapted for whatever the new ‘business as usual’ is, as well as how, under these new ways of working, tax risk and control frameworks remain operationally and demonstrably robust.
All these points raise the question of how? What can businesses be doing now to remain operationally resilient? We see five broad areas to review for change:
- Technology: does your technology allow you to do what you need to do and are you leveraging the best out of it?
- Data: do you have access to good quality data on demand, to enable you to be dynamic and respond to changing scenarios?
- Resources: do you have enough, are they proficient in the technical and digital skills needed for this new normal and how flexible is your resource model?
- Processes: are these standardised, streamlined and documented to enable a cost efficient running of tax operations and can they be picked up by someone else at speed?
- Visibility: oversight of tax affairs and business decisions; is your tax governance robust in a remote working environment?
It’s important to look at each of these strategically, so that changes that make the most difference now will also be sustainable in the longer term. There are some quick wins such as highlighting ‘nice to have’ activities that can be stopped; making it easy for others to pick up work with clear, efficient and properly documented processes and, once well documented, identifying work that can be done outside of the tax team to release skilled tax resources.
But now may be the time for further changes to your tax operating model. The smart use of technology can free up key resources and aid better decision making. For example, self user, data manipulation software can automate repeatable manual tasks, facilitate more efficient collaboration and maximise insights through data visualisation. Upskilling your staff now in the use of new technologies can generate long-term benefits.
Similarly, resource models will need to be considered to ensure they bring the required skills to your organisation and are operationally resilient. Adopting a flexible resource model, such as interim managed services, (i.e., the short-term addition of external specialists working as part of your tax team), can alleviate pressure on the tax function by addressing critical, urgent tax needs, providing flexible access to a range of specialists, processes, capacity and technology.
There is no blanket solution for all businesses and we are currently supporting many clients to achieve operational resilience, specific to their needs. We have recorded a webcast discussing these issues so you can hear more of our insights on the current climate and the practical measures businesses can consider now.