Confidence in tax compliance
Innovative use of data analytics to automate compliances processes
Tax compliance is a fact of life for every business. The process can be labour-intensive, repetitive and hard to get right - and the consequences of getting it wrong can be acute. There may be financial penalties for anyone deemed to have underpaid, and damage to the company’s reputation, not to mention the potential impact of underpayment on public resources.
Even in today’s world of electronic accounting systems, compliance can mean trawling through spreadsheet upon spreadsheet, manually searching for keywords to identify items that could qualify for a certain tax treatment.
Deloitte UK’s tax technology team set out to create an innovative solution to help address the problem. Our idea was to build an artificial intelligence engine that simulates the way people decide which treatment to apply. It’s smart enough to know when words are incorrectly spelled or have different inflections, and it makes judgements when there are competing matches (words/phrases in the underlying data that could be treated in several different ways) in much the same way a person does - and at a much faster pace. All of this allows us to automate an otherwise time-consuming and costly exercise.
There are lots of benefits - from managing the risk of human error and being able to analyse an entire dataset rather than a sample, to a full audit trail of decisions made (the system records everything). But perhaps the most interesting benefit is the confidence that comes with having more trust in the process.
Since the software reached production we have helped dozens of companies fully automate elements of their compliance processes as they work towards more reliable tax reporting and confident commercial decisions. The biggest impact by far has been on process efficiency; clients are seeing huge time savings in the ongoing process costs compared to the manual process.
This is part of an increasing trend in tax whereby software systems can help companies understand it better, improve their tax reporting, cut operational costs associated with reporting and ultimately improve the smooth running of the business.
Impact Report team