The wave of regulatory obligation, media attention and required change to tax operating models is driving some serious questions around whether to outsource, in-source or co-source the tax function.
Outsourcing the tax function to an advisor ensures that the widest range of skills and the highest level of tax expertise can be leveraged, provides assurance on the output and removes the work and challenge associated with finding, hiring and retaining an internal tax team, yet it comes at a significant cost. In addition, advisors sometimes struggle to understand the complexity of each individual business, often applying a 'cookie-cutter' approach rather than getting under the skin of the organisation to understand it properly. Ultimately the onus is still on the ‘client’ to ensure data is collected and validated.
Insourcing ensures that businesses maintain control, drive their own process and mitigate tax risk. Investing in technology and process is more realistic than adding additional headcount but most importantly delivers an automated tax function with improved data access, reliability and accuracy along with greater business insight and ability to retain and acquire talent. The flipside however is that a business case needs to be built so that investment in the transformation and the technology can be made.
During a recent customer survey at Tax Systems we discovered that by bringing the tax function and compliance process in house, corporations have been able to save up to £70,000 on advisor fees, at the same time gaining greater control, accuracy and efficiency of the process. Almost all those surveyed stated that the business case put forward for bringing the tax function in-house demonstrated the ability to reduce advisor costs by 50%.
Co-sourcing is a hybrid option whereby the business has the benefit of controlling and managing its core end-to-end compliance cycle using technology that they own whilst still using an external advisor for what would be considered ‘value’ add and complex areas.