To succeed digital tax systems must work for all
28 October: The digitalisation of tax offers significant potential benefits for taxpayers and agents, as well as administrations, but these will not be achieved without collaboration agree industry experts at the Wyman Symposium.
On the evening of 21 October, ICAEW’s Tax Faculty hosted its annual Wyman Symposium where respected voices from the tax community offer their insights on a burning topic. In 2020, as the symposium itself went digital for the first time, there could be no topic more pressing than the digitalisation of tax and what a good digital administration should look like.
The impact of coronavirus on uptake of digital technologies was touched on by all of the speakers, who this year included:
- Jane McCormick, recently retired as global Head of Tax at KPMG;
- Paul Aplin, former ICAEW President and chair of the Tax Faculty;
- Gary Turner, CEO of Xero;
- Louise Dunstan Rice, a Deputy Director, Strategy, HMRC; and
- Roy Wallace, Director MTD, HMRC.
A global context
McCormick set the scene: “The first step of digitisation is the move to digital filings and online communication, this has very significant benefits for all. Businesses and tax administration's trying to deal with compliance activity during the COVID-19 pandemic have learned the hard way, that reliance on paper and physical filings does not make for a robust tax system.”
She provided the context of the progress being made in other jurisdictions. Not all tax administrations have followed the same route, some have jumped to a later stage in the process of digitalisation, such as in Italy where e-invoicing is used. So far, the UK has focused on VAT, but little progress has been made on corporate taxes.
“The greatest progress has been made in countries where digitalisation in tax has been part of a broader strategy of digitalisation by government, using single user logins and sharing of data between departments. Examples that are often given of this are Australia and Estonia,” she said.
McCormick then highlighted the challenge these different approaches are causing for larger organisations. “As each country develops its own system, businesses have to manage multiple connections to tax authorities and multiple digital identities. Problems can also occur in international processes, such as applications for treaty relief, where the digital evidence produced by one country may not be compatible with the system in another.”
She concluded: “Moving to a world where tax ‘just happens’ will not be easy. As with other areas of tax policy, what will be needed is constructive dialogue between the tax authorities to try and ensure as much global consistency as possible. Similarly, between governments and taxpayers to ensure that changes happen at a pace and cost that businesses actually absorb.”
Business need as a driver
Aplin meanwhile was focused on the impact of digitalisation on smaller businesses and argued that the aims of a digitalised tax system should be driven by businesses, rather than tax administration.
“The starting point should be what businesses need: timely, accurate and useful information. It should be a case of how do we build software and apps that small businesses will find easy to use, or that provide up to date, accurate information on which to base their decisions. Digital products that help them to improve efficiency, productivity and make accurate tax filings,” he said. “Reliable tax information will then be the natural by-product.”
Acknowledging how COVID-19 has reinforced the benefits of digital technology and cloud based solutions, Aplin argued that much greater ambition was needed for the tax system of the future. His vision includes a step change in the use of pre-populated data, greater use of technologies, such as blockchain, to change business models and the opportunity for agents to offer real time support.
“To deliver all this, businesses, agents, HMRC and software suppliers need to work together as equal stakeholders in genuine partnership,” he said. “Delivering a common, mutually-beneficial agenda to harness the power of digital technology is an agenda worth striving for together.”
Ease of access
Meanwhile, Dunstan Rice outlined HMRC’s vision of the digital tax system of the future as one that was closer to real time, allowing people and businesses to “pay the right tax with ease” as they live their lives and go about their business.
She confirmed that building an easily accessible single digital account is key to this vision, as well as providing access to agents. “Taxpayers want a complete financial picture, bringing together the different taxes and data sources, and enabling HMRC to provide more personalised services. We are also working to improve services for agents and representatives, designing and access from the outset, and ensuring agents can see and do what their clients can,” she said.
Dunstan Rice reiterated HMRC’s commitment to working with external stakeholders to create digitalise tax. “We want to co-create and co-design the tax system of the future with external stakeholders agents and customers, involving people with different perspectives, early and often to genuinely shape solutions that reflect the needs of the people using that system and services,” she concluded.
Xero’s Turner agreed that any new tax system needed to be open and collaborative, and that everyone must play their part. “In our role as a software vendor we will continue to work closely with HMRC, as well as the accounting community to support this agenda.
“In fact, we believe, without accountants, front and centre, then the ambition that HMRC might have for really transforming our tax system will happen much more slowly, if at all,” he said. “A digital tax system needs to be resilient, seamless and connected, and accountants will be the glue.”
Find out more
- Watch the recording of the full Wyman Symposium. Hear each of the four panellists’ arguments in full alongside the answers they gave to questions posed by the live audience.
- Read our interview with Roy Wallace's on the need for an inclusive digital tax system. (19 October 2020)
- Read more on HMRC's 10-year digital strategy (July 2020)
- ICAEW support on MTD