Operational resilience: How to meet your tax obligations and still be resilient

Businesses are now dealing with the consequences and implications of COVID-19 (coronavirus) as governments begin the complicated process of unwinding their lockdown. Disruption has prompted unprecedented change within entire organisations. Although many tax teams have managed the situation well, it is still fraught with operational pressures and challenges.

We’ve had conversations with tax heads and business leaders over the last few weeks about how they are responding to the current environment. While each company’s experience is unique, we are noticing commonalities in approaches, particularly prioritisation, and adaptation. Prioritisation is driven by business imperatives. It focuses on key person dependencies, cost reduction (how do tax operations contribute to this), managing cashflow, risk and quality (maintenance and management of tax authority relationships, protection reputation and brand).

These external demands are added to the business as usual. A stretched workforce is facing more demands. Critical activities like tax accounting, cash flow forecasting, and compliance around Senior Accounting Officer (Corporate Criminal Offence) and EU Mandatory Disclosure Regime are all being demanded of them. While tax authorities around the world have made many welcome concessions to help businesses, they are not unlimited. It is up to tax functions to determine how they can adapt their operating model for whatever new “business as usual” may be, and how they can ensure that the control and risk frameworks of tax remain robust and operationally sound under these new working models.

These points raise the question: “How can I make my business more resilient?” How can businesses remain resilient in the face of these challenges? Five broad areas are worth examining for potential change:

• Technology: Does your technology enable you to do the things you need and can you get the most out of it?
• Data: Do you have the data you need to be able to react to changing situations and make decisions?
• Are you able to tap into your resources?
• Are these processes standardised, streamlined, and documented to allow for a cost-efficient running of tax operations? Can they be picked up quickly by another person?
• Visibility: Overseeing tax affairs and business decisions. Is your tax governance strong in remote environments?

Each of these should be viewed strategically to ensure that the changes that make the biggest impact now can also last for the long-term. Some quick wins include highlighting the ‘nice-to-have’ activities that should be stopped, making it easier for others to take over work, and once that is done, identifying work that can go outside of the tax department to free up tax resources.

Now may be the right time to make further adjustments to your tax operating model. Smart technology use can help you save time and make better decisions. Self-use data manipulation software, for example, can automate repetitive manual tasks, make collaboration easier, and provide insights through data visualisation. Long-term benefits can be gained by educating your staff in new technologies.

Resource models are also important to consider in order to ensure that they have the right skills and are resilient to operational changes. A flexible resource model such as interim managed service (i.e. the temporary addition of external specialists to your tax team) can ease pressure on the tax function. It addresses critical tax needs and provides flexible access to a variety of specialists, processes.

We are currently helping many clients achieve operational resilience that is specific to their requirements. There is no one-size fits all solution. These issues were discussed in a webcast. You can listen to our thoughts and see the practical steps businesses can take now.