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Exploring the current and future environment of tax compliance

The current and future environment of tax compliance

The way companies and their advisers deal with tax compliance has barely changed over the past 20 years, but the tax environment and how people run their businesses and lives have. Against this background, what are HMRC’s plans and how should you prepare?

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Allister Weir

Partner, Head of Domestic Corporate Tax Compliance

KPMG in the UK

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The UK political, social and economic environment is changing, and fast. This digital evolution has impacted the UK environment in a number of ways:

  1. Increased government focus on regional businesses, economies and real-time reporting
  2. Post-Brexit industrial strategy
  3. Fast paced adoption of new technology by businesses clients and competitors
  4. The rate at which companies grow from ‘start-up’ to ‘significant’ continues to increase, creating demand for greater focus on tax’s role within the business
  5. Digital versus human labour, the evolution of workforce skills and the requirement for flexible work environments

In this respect, HRMC’s digital capability is ahead of many companies, with its shift to real-time reporting ultimately introducing new requirements and risks. More specifically and more importantly for finance and tax, the evolution of the digital agenda has impacted HMRC’s governance and reporting strategy. Specifically,   

  • HMRC is introducing a new Business Risk Review (BRR) with a lot more focus on the governance of tax, including references to risk registers, tax policies, real-time communication and importantly the integrity of the core data in a taxpayer’s underlying financial systems. 
  • There is greater emphasis on a business’s obligations regarding the Senior Accounting Officer (SAO) requirements, Country by Country reporting and the Tax Strategy publication. 
  • HMRC, like other tax authorities, are moving to a future state where tax sensitive financial data is extracted directly from a business’s core financial systems, with minimal manual adjustments, e.g. MTD. 

Now that these changes are more likely to be in effect, what are companies looking for and what should they consider as they look to navigate this new digital environment?

  1. Efficiency through automation giving back time to spend on value add activities
  2. Scalable and flexible resources
  3. Improved documentation of processes and controls
  4. Control and visibility
  5. Innovative technology

The current and future environment of tax compliance can be difficult to translate and implement into your business processes. Allow our KPMG experts alongside KPMG Tax Connect to help you benefit from these new digital capabilities to ease the burden of tax compliance.  

Learn more about KPMG Tax Connect and how we can help by downloading the slipsheet.

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