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SAO and SOA - what does it mean for tax?

Don't worry, I haven't got my acronyms muddled. Let me explain.

No doubt you have been inundated recently with information from the Big 4 on HMRC's move to impose new duties on Senior Accounting Officers (SAOs).

The new FA 2009 provisions will impact on around 2,000 companies or groups and require the SAO to certify that appropriate systems and processes are in place to calculate tax liabilities for all of the major business taxes. The long and short of it is, though, that a Deloitte survey of tax and finance heads 3 weeks after the Budget found that 86% believed that they needed to spend between £50,000 to £250,000 to meet the requirements. Alarmingly, 1% thought that £500K was required to whip the tax department into shape, leaving 13% sitting pretty in the knowledge that their systems and processes are perfect!  This implies that the vast majority of tax departments know there are serious issues that need addressing.

Regardless of which taxes need attention, the main focus required is on how to access the relevant data and how this data flows between systems. Typically, data needs to be extracted from ERP (Enterprise Resource Planning) systems such as Oracle or SAP and from BI (Business Intelligence) systems such as Hyperion or Cognos. Data is then moved into a system that can analyse, consolidate and manipulate it into formats required by tax specialists before being pushed into spreadsheets or proprietary calculation engines for final submission. This is where many tax people get lost - because we know you're not IT techies and don't want to be. We also know that you're generally happy with the flexibility of spreadsheets and (sometimes rightly) fear the loss of control and flexibility by moving to new systems which typically involve web-based solutions or tax data warehouses.

However, current technologies such as Service Oriented Architecture (SOA) are designed to make the flow of data simpler and more efficient. SOA is a method by which software applications can be made to talk to one another ("integrated" in techie speak) in a simpler, more consistent manner. Its goal is to make software applications more open and provide the "glue" that binds them together to make a seamless flow of data possible. Each piece of software then acts as a service provider that can be called upon by any other application to manipulate data as required.

That's all well and good, but what does this mean for you and your organisation? In a nutshell, new systems and processes are available to allow:

- more effective web-based data gathering;
- less re-typing of data;
- easier manipulation of large volumes of data;
- less time pressure at key points in the reporting cycle.

So, back to my original question: "SAO and SOA - what does it mean for tax?".

It means you need to get your systems documented and talking to one another more effectively, using proven, reliable technologies. It means you need to be able to prove that data is flowing correctly. It means that if you can't, HMRC will be able to penalise your SAO, causing possible reputational damage. It means you need to act now.

One last thing - we called our company Tax Automation for a reason - it's what we do! We've been doing it longer and with more effective results than most and believe we can help you through these interesting times. If you would like to speak to someone who understands (and can communicate with) both tax and IT about how you should be approaching the future, call me on 0118 988 0241.

Bryony Clinton

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