Why Companies Need to Be Paying More Attention to Their Data

Written by JSimmons

Tax processes in the UK have undergone significant changes in recent years, from adjustments due to the Covid-19 pandemic, to the implementation of tighter rules meant to crack down on tax avoidance. Businesses involved in developing medical innovations, for example, are offered corporate tax credits by the UK government for qualifying R&D expenditures. This provides valuable tax rebates that incentivises and funds further research.

To keep up with these ever-changing tax developments, businesses across various fields can better manage their tax data by making use of new technologies. Insights on digital skills in the UK by LHH notes that the country tracked £27.4 billion (US $32.9 billion) in private capital investments in its tech sector in 2021. Moreover, UK Digital Strategy is making huge investments to fund higher education in artificial intelligence and data science, in addition to funding partnerships with companies to upskill current employees.

As modern processes require new ways to manage and keep track of volumes of information, big data has become a leading solution for organisations to navigate periods of constant transformation. In this article, we'll look at some of the ways big data can help with business taxes:

Visualisation of data

Due to tax processes being detailed and data intensive in nature, a solid platform for monitoring, tracking, and analysing volumes of data with ample speed and accuracy is now a requirement. One way that big data helps in this aspect is by allowing for the presentation of tax data analytics on interactive dashboards, usually via specialised platforms or other visuals, which allow experts to view tax data from new perspectives — maybe dynamically, as information flows through.

For instance, if they want to forecast and visualise the long-term trajectories of their tax payments vis a vis different tax schemes, big data can allow for predictive modelling to understand which factors may alter their projections. This form of data presentation helps analysts compare and filter the tax information they need to draw richer insights, recognise trends, or make smarter tax decisions going forward — all while dealing with data that is made accurate and simple.

Increased data accuracy

We've previously covered the three tips for making tax digital for VAT at WR Partners, and our key takeaway from the article is that data is meant to serve you. While each business is different, using data analytics can help drive valuable insights that will make your business successful while still remaining tax compliant.

We've mentioned accuracy as an advantage of big data analytics, and this is especially important in terms of your business' tax documents and data. One way to harness big data for taxes is to review tax codes and check precision to avoid fraud, as big data tools allow businesses to input huge amounts of information and present an analysis according to your needs. Generating detailed but accurate tax reports and invoices can help reduce the risk of audits, and promote tax transparency overall.

The future of tax and data

This relationship between tax and technology is not necessarily new, but with shifts and changes in tax laws and regulations happening in the foreseeable future, we can expect the technology to continue evolving as we go. This feature from International Tax Review highlights a rising need for tax advisers as a bridge between tax and IT. This also creates fresh opportunities for professional roles within an expanding field. Paired with other technologies, the potential of data analytics is limited only by what the market needs. In using machine learning technology for example, tax authorities can detect anomalies in tax data by automating cross-checking processes without risk of human error. Automation with data analytics can also help speed up real-time processing of VAT inputs for refund purposes.

For now, the future of data in tax needs to stay aligned with standards for data governance and data awareness, making use of data and technology to uphold tax transparency.