How to ensure operational resilience by being always on tax compliance

It is becoming more difficult to comply with tax laws. This is why it is challenging for under-pressure and resource-constrained tax departments to manage this increasing area of risk. It can have devastating consequences for an organisation’s operational resilience. These include cash flow problems, poor decision-making and reputational damage.

It is a concern for businesses. Our 24th Annual CEO Survey revealed that 72% of UK CEOs are worried about rising tax obligations.

This challenge demands a new, agile compliance approach. It must be supported by technology that allows tax departments more confidence in their tax management and can react to economic, political, and business disruptions.

What is the importance of tax compliance for operational resilience?

Unexpected tax charges and penalty charges are a direct result of compliance failure. This is becoming more urgent as the global tax authorities adopt a stricter enforcement and fine collection policy. HMRC’s Connect data analysis software, for example, has allowed them to collect an additional PS4bn in taxes within its first four year of operation.

Investors and consumers can be put off by fines for tax avoidance and financial reporting errors. This is because ethical behavior of businesses is being closely scrutinized and could potentially weaken the organisation’s resilience.

Inflexible compliance that doesn’t allow for quick responses to changes can lead to tax assumptions being out-of-date, sub-optimal use of tax assets, and reduced cash flow and liquidity. These are all serious negative outcomes.

You can ensure compliance and be able to react quickly to disruptions and changes, maximize cash flow, and make better strategic decisions. All of these factors support greater operational resilience.

How can you ensure compliance?

compliance technology is the answer.

• Provides real-time insight to current operations. This allows tax departments to quickly respond to market disruptions, changing regulatory requirements, or unexpected events like the pandemic. Visual representations can offer a variety of insights that make it easier to spot outliers or identify trends that may need attention. For example, if the country’s capital expenditure profile is unusually high, this could help you determine if there are any outliers.
• Centralised compliance- Tax departments have a complete view of their business when all data is in one place. This allows them to take more holistic and effective decisions than if they were looking at compliance separately.

Additionally, a flexible and future-proofed compliance approach where Tax departments can:

• Look ahead and plan for the future with tax experts who can help you in all areas of compliance delivery, technology, data, and regulatory changes.
• Utilize bespoke technology tools to improve monitor and understand the effects of regulatory changesg raising tax rates or changing loss carry back roles. Both of these were announced in the UK’s March budget statement.
• Rapidly scale up technology and resources when needed. Respond to the increasing demand for regular, real-time reporting
• Have more confidence that the compliance approach they use can adapt to constantly changing circumstances.

PwC can help you outsource your tax compliance. This will provide you with a ‘always-on’ centralised compliance approach that allows for agility and insight to support operational resilience 24 hours a day.

It is time to consider whether your compliance approach supports or undermines your operational resilience.

• Are you able to see in real time your compliance obligations?
• Are you getting the most out of your compliance data?
• Are you equipped with the technology and resources to respond effectively to compliance changes?
• Are you able to predict the future with your compliance strategy?

If you feel that the answers to these questions indicate that you require a new approach in order to improve your operational resilience, please contact us.