Finance transformations represent risk and opportunities for tax functions. The term finance transformation is a broad term used to describe any change programme focused on the finance function. Generally there are broadly two types: organisational change and finance system change. Either of these generic change programmes will impact on the tax function's ability to continue to remain tax compliant as inevitably the data, systems and processes which tax rely on to deliver tax compliance and reporting will be impacted.
It is therefore imperative that the tax function fully engage with the finance transformation.
To provide further context, tax relies on data provided by finance functions, systems maintained by finance and processes established by finance. Tax authorities legislatively impose obligations upon senior finance personnel (e.g. SAO in the UK) and require data from organisations directly from finance systems (e.g. SAF-T requirements, real-time reporting). It is clear then that tax, and the wider organisation, can no longer deliver its legislative commitments effectively if it accepts data from finance that is not suited to its requirements, or where the finance processes inadequately support the tax function .
A finance transformation project is the opportunity for tax to define those requirements. A key success factor is the ability of Tax to position itself as a primary customer of the finance transformation programme.
To achieve this requires:
Tax functions should seek support to improve their literacy with finance transformation project terminology, how to define data and business requirements in this context, and to understand the fundamentals of how such programmes run.
Tax can establish itself in an integrated role in the programme governance, ensure authority to sign off and review project stages and obtain appropriate resources to ensure Tax requirements gathering, design and testing is adequately covered for Tax.
In many cases work may be required to define the business case for Tax’s involvement and to bridge the comfort gap experienced between both traditional tax practitioners, and traditional finance and IT practitioners.