Why always-on tax compliance is key to operational resilience - and how to achieve it

Tax compliance is increasingly complex to navigate and managing this growing area of risk is a challenge for resource-constrained and under-pressure tax departments. The consequences of getting it wrong can impact an organisation’s operational resilience, from cash flow issues and poor decision-making to reputational damage.

It’s a major worry for businesses - our recent 24th Annual CEO Survey found 72% of UK CEOs are concerned about increasing tax obligations.

Tackling this challenge requires a new agile compliance approach, one that’s underpinned by technology that allows tax departments to manage their tax position with more confidence and react proactively to economic, political and business disruption.

Why is tax compliance important for operational resilience?

Financial costs, whether unexpected tax charges or penalty charges, are an obvious impact of compliance failure that’s rising in urgency as global tax authorities take a tougher stance on enforcement and fine collection. For example, HMRC’s Connect data analytics software has helped them collect an extra £4bn in tax during its first four years of use.

Fines for tax avoidance or financial reporting errors can also put off investors and consumers in an environment where businesses’ ethical behaviour is under great scrutiny, and potentially undermine the organisation’s resilience through the negative impact on investment or revenue. 

An inflexible compliance approach that does not allow you to respond quickly to changes can result in tax assumptions being out of step with the current environment, a sub-optimal utilisation of tax assets and a reduction in cash flow and liquidity. All seriously negative outcomes.

Get compliance right, however, and you can proactively respond to changes and disruption, maximise cash flow and make more effective strategic decisions. All supporting greater operational resilience.

How do you get compliance right?

The answer lies in compliance technology that delivers:

• Real-time insight into current operations and allows tax departments to rapidly respond to changing regulatory demands, market disruption or unpredictable events such as the pandemic. Visual representations of data can provide an array of insights, making it easier to identify outliers and spot trends that might need action, such as whether the capital expenditure profile for a country is an outlier
• Centralised compliance - Compliance data that sits in one easily accessible place gives tax departments a complete picture of their business. This enables them to make more effective, holistic decisions, rather than look at compliance in a siloed way.

Plus an agile and future proofed compliance approach where Tax departments can:

• Plan ahead and look to the future, supported by tax experts across all areas of compliance delivery, regulatory changes, technology and data.
• Leverage bespoke technology tools that help them better understand and monitor the impact of regulatory changesg increasing tax rates or changes to loss carry back roles, both of which were announced in the UK’s March budget statement.
• Scale up resources and technology quickly when needed, e.g. to respond to the need for more regular real time reporting
• Have greater confidence that their compliance approach can flex as needed to respond to constant change

Outsourcing your tax compliance to PwC will give you an ‘always on’ centralised compliance approach, where agility and insight helps to truly support operational resilience 24/7.

So time to ask yourself is your compliance approach supporting or undermining your operational resilience?

• Do you have a complete real-time picture of your compliance obligations?
• Are you getting the best insights from your compliance data?
• Do you have the resources and technology to effectively respond to compliance changes?
• Is your compliance approach future-proofed?

If the answers to these questions suggest that you need a new approach to better support your operational resilience, please get in touch.