Taxing Times
Author:
Rachel Escott
The introduction of ROS as part of the Revenue Commissioners' drive to ‘encourage electronic filing of Returns and Declarations and other electronic information exchange’ has increased the pressure to use technology within the compliance process.
While the introduction of the ROS process for Corporation Tax has not been without teething problems and has yet to extend to a fully integrated service, it is clear that e-filing is here to stay - changing the way that we interact with the Revenue.
E-filing will provide undeniable benefits. These include additional flexibility in the timing of filing, and more timely communications between clients, advisors and the Revenue. The Revenue is even discussing the provision of up to date information on the status of returns, payments and other correspondence. To take advantage of these benefits, tax advisers will need the software that allows them to e-file, and interact directly with ROS.
The Revenue Commissioners are ahead of their European counterparts when it comes to electronic compliance, but the situation is not always mirrored by the taxpayer.
A by-product of the ROS regime is the new ‘Extract from Accounts’ sections on the CT1. The Revenue Commissioners’ initiative to combine accounts information within a single return, for all but the largest corporations, is welcome. The questions over the structure of the Profit & Loss account that should drive the corporation tax calculations will be a challenge for those involved in compliance.
Preliminary payments
The phasing-in of the preliminary payment has required some re-organisation of the compliance process.
Making tax payments within the accounting period requires the tax charge to be accurately forecast. Again, this is an area where technology can provide assistance to the tax practitioner. A number of solutions can be envisaged. At one end of the spectrum it is possible for accounts data to be fed automatically into a tax computation / forecasting tool providing immediate access to accurate forecasts. At the other, the numbers used in calculation of the figure that was actually paid must be stored in a way that provides easy review and an appropriate level of audit trail and cross referencing.
Technology can enhance the process
Taxing times, you may think, but in reality the changing environment has brought into focus the tax practitioners' dilemma - how to ensure the quality and accuracy of compliance work whilst still finding time for the value-added work of planning.
Increased regulation means that it is no longer acceptable to do the bare minimum to get by on your compliance. By acting now, a proactive tax professional may be able to use these changes as the basis for an investment in the review and update of their tax compliance processes.
For a number of years it has been common to use generic software, such as Microsoft Excel, to calculate and complete tax computations. The generic nature of the solution means that the CT1 is commonly completed by hand or using simple form-filling technology. The use of Excel has resulted in significant variation in the way each user approaches the calculation and presentation of the computation. In addition, amendments to spreadsheets for changes in tax legislation can be time consuming and difficult to control.
The future
The tax professional cannot afford to sit back and wait to see what others do when it comes to trends in compliance. Decisions made now could have enormous benefits in the future.
Already, the next generation of tax technology tools are on the horizon. These include:
l Process management systems - allowing you to track and control your process around data collection, return preparation and statutory deadline compliance across multiple companies, jurisdictions and year-ends;
l Data-mining - to gain access to targeted opportunities to mitigate your tax position;
l Benchmarking - being able to compare headline figures with all other peers and using this information to assess those computational elements that may be challenged by the Revenue.
Keeping on the cutting edge of technology will help differentiate your organisation, allowing you the assurance that your tax exposures are controlled and mitigated to their greatest extent.
What now?
There are three steps that tax professionals should consider to help keep their house in order:
1. Review your existing processes;
2. Evaluate the different software options available in the market;
3. Build the business case for any changes you believe are required.
Table omitted from web edition.
Accountancy Ireland Vol 36 No 5 October 2004.