Value from tax data: Myth or business imperative?
August 06, 2021
How do you unlock value from your tax data? What skills and tools are needed? And if your organisation can do this, what is the pot of gold at the end of the data rainbow?
The most common way to unlock value from data is by combining data sources and applying specialist knowledge.
If I take, for example, financial fixed asset data, combine it with asset life cycle management data and have a capital allowances specialist review it, I can make better capital allowance deductions.
If I combine investment transaction data with AP data, because I know what HMRC would agree to in terms of VAT recovery for a pension scheme, I can identify the proportion of input tax which otherwise would be a cost, where recovery would be available.
There are many many examples where combining data together with specialist knowledge creates value.
All the skills needed to do this are not typically part of a tax function’s toolkit, there is often limited understanding of where data comes from and few who can use the tools to extract and combine data. Knowing how to make capital allowance deductions is tax industry knowledge, combining this with the right tools and skills is the secret sauce that leads to the data pot of gold.
There are, however, organisations who have developed these skills within their tax functions, who have hired data engineers or have sent their staff to digital academies to learn about the best tools.
There is a clear and coherent business case for this type of investment in data. Get it right and you can:
- Improve your bottom line by eliminating wasted effort and reducing reprocessing costs
- Improve working capital and cash flow
- Identify transaction level value leakage on an industrial scale
- Put a monetary value on every single transactional error
- Take advantage of leading edge technology to perform anomaly detection and spot where new business flows may be occurring and be able to intervene early to avoid costly tax mistakes
- Share meaningful business insights with the C-Suite as well as describe the benefits of greater efficiencies and smarter working.
The value from data is already being enjoyed by many businesses, but others are mid-journey and some have yet to start.
However, none of this is easy. It certainly isn’t just about having the latest technology or a single person who knows drag and drop data preparation and analytics tools. To drive value from data you need people, both in-house and external, with experience, vision and expertise to identify, guide and advise as new skills, tools and knowledge are developed.
We recommend a methodical, trusted approach in the form of a tax data value analysis which uses your data, analyses it, articulates value opportunities and assesses your ‘as is’ state and helps define your ‘to be’ capabilities and what needs to happen to get you there.
The final outcome will vary from business to business and the value will differ depending on the starting point.
But one thing is certain. If you can combine data and apply specialist knowledge, there is value to be found.