Data science: the future of the tax industry

In 2023, accountancy firms across the UK will be striving to embrace technology innovation in general – and data science in particular – to keep up with legislative changes, avoid penalties and provide effective services for their clients, according to Bruce Martin, CEO of tax software firm, Tax Systems.

Martin explains that as recession looms, firms are being asked to do more with less – delve deeper into data and do so while driving better insights – all on top of their basic everyday tasks. In response, he argues data science processes, technologies, and expertise will play a vital role in moving the tax industry forwards over the next few years.

This comes at a time when technology is enabling firms to position themselves differently to both customers and their staff (and potential future customers and staff). In many organisations, legacy processes still dominate, from emails, phone calls and sending Excel files to rekeying data and a huge amount of copy/paste activity. Martin explains that “the future that we’re starting to see is that the bigger firms are on the journey towards using a single portal for all interactions, using technology to do things better, quicker and smarter.”

He argues that although many firms have embraced technology in some key areas, adoption in tax specifically has been a little slower because of the way information has been submitted to HMRC.

“Now that HMRC is looking to digitalise the tax system, it opens up new opportunities for firms to embrace technology that will allow them to reap the kinds of benefits they have seen in other areas in their tax functions,” he said.

The future of the accounting industry  

Such developments will mean that the accounting industry is likely to become a “very different space”, with shifts such as MTD for corporation tax requiring a completely digital and automated process.

“Technology can remove instances of human error. Changing figures in Excel spreadsheets should be a thing of the past,” Martin says, adding that firms should be automating the whole compliance process and “doing the heavy lifting” for clients, allowing them to focus on the high-margin activities.

Martin goes on to explain that this can be taken care of by Tax Systems’ software. He says that accountants can implement data science technologies via a purpose-built calculation engine which takes into account all of the relevant legislation and “enables that end-to-end compliance journey”.

Martin believes this creates a platform for firms to bolt on different parts of their process to create an end-to-end tax compliance process. “I am glad that we can support our clients on that journey. Being a software company, we want to make sure we’re helping and empowering our customers to the best of our ability.”

Upskilling vs acquiring

However, Martin also acknowledges that the constricted talent market could pose a challenge when it comes to evolving technologically. Shortages in tax talent mean that “upskilling as opposed to hiring” is the most sensible course of action, he says.

He adds that this presents a great opportunity for the younger generation to access a career in tax, as coding and computer science is “a language many have grown up with”.

Given that disciplines such as data science are “the future of the tax industry”, this should be seen as a priceless asset to accounting firms, Martin says.