Solving the ongoing skills shortage within the tax industry

By Russell Gammon, Chief Solutions Officer at Tax Systems

The Covid pandemic accelerated a shift in outlook and working practices of businesses in all sectors, not least the finance sector. With the influence of technology and a digital-expert generation of workers, the tax career roadmap is being completely redefined. The importance of digital skills when applying for new jobs in finance and tax can’t be underestimated.

Technologies such as Enterprise Resource Planning (ERP) and Artificial Intelligence (AI) – once the domain of the IT department – are now utilised broadly across many business functions. Tax and accounting teams must engage a perfect blend of tech and human expertise to drive innovation and meet evolving compliance needs.

Compounded by skills shortages, the Great Resignation, and changes posed by HMRC’s ‘Making Tax Digital’ (MTD) scheme, tax teams will need to adapt their hiring strategies to find and upskill the specialists for the more digital tax industry. With employees reconsidering their career goals, many organisations are depleted of skilled tax staff – knowing the right skills and how to harness them will ensure success.

Making Tax Digital (MTD) – the evolving tax industry

Speed, efficiency, and accuracy are the main aims of MTD so there’s a pressure on organisations to get their tax right, in order to avoid tougher sanctions for incorrect and late filings. This includes a points-based penalty system for VAT returns, which can amount to as much as 100% of the cost of the error.

The more frequent quarterly filings required for MTD for Corporation Tax (CT) make it imperative for teams to elevate CT processes. This demands a complete synergy in VAT and CT tax data, as any changes in source data must be reflected in both CT and VAT to ensure consistent and trusted figures are filed.

According to HMRC’s directive, the industry is set to become data-driven and shared data must have a single source of truth to be completely accurate – good data governance practices will be essential for success. With MTD for CT and VAT filings only five days apart, insight across the entire tax team is vital to avoid processing in silos and coming in with different figures.

Tech-driven employment challenges

The safe, well-trodden path of tax recruitment and retention has been completely upended by the introduction and increasing acceptance of digitalisation. This is perhaps exacerbated in a specialisation such as tax where companies typically struggle with keeping and developing long-term skills. Many graduates no longer want to work with spreadsheets and databases and are drawn to other industries where they can use advanced technologies such as AI, meaning tax must keep up.

With the more regular tax filings that MTD for CT will impose comes a greater workload, which is incongruous with leaner budgets. This forces tax departments to adopt technology to cope with time-consuming administration and to be more customer-focused. The classic spreadsheet has evolved into more advanced tools such as ERP, blockchain, analytics and data visualisation. In fact, a survey by ACCA reveals that 89% of accounting and finance professionals said that digital skills were necessary.

The benefits of automation are huge, for instance using MTD software for data collection to minimise errors in manual data inputs; extracting data to reduce transfer time between source and software and validating data to eliminate human intervention while picking up errors.

Tax and accounting departments must now upskill to be competent in data interpretation. The days of hiring tax professionals solely for their tax technical skills are over. Digital and AI skills are among the core expertise required for the new tax requirements. But it’s not even as easy as looking for this complex skill set – workers are seeking additional rewards within job opportunities, such as a healthy work-life balance and a motivating work environment.

The influence of Gen Z workers

The UK’s new generation of workers, the digitally-native Generation Z (born between 1997 and mid-2000s), are leading this change. Manual data entry jobs are no longer an acceptable starting point, as workers expect to be trained in new technologies from day one. Now that tech has eliminated menial spreadsheet tasks, businesses can redeploy their highly skilled tax advisors to areas of the business where it’s most needed.

Workers’ expectations exceed basic pay requirements, with a positive wellbeing-focused working culture, flexible working and a harmonious work-life balance all a must. Employer ESG policies aligned to social and environmental causes also rank high in importance. Those employers who don’t live by their values risk not being attractive enough to secure emerging talent.

Securing the right skills for the future of tax

It’s no mean feat to achieve the right combination of skills development, challenge and work-life balance to retain the digital accountant in 2022. Strategies for securing and retaining the best tax talent must start now in order to future-proof businesses and stay compliant.

The perfect balance of technology and human expertise may need some nurturing and training to perfect. Skills to look for include accounting, business and digital, but keeping up with the technologies required for various roles will be critical for hiring managers. Fluency in data analytics and tax rules, as well as a facility for real-time tax dashboards and visualisation methods are a must.

Tax leaders that fully understand their employees’ needs and can motivate workers with truly people-first strategies will be a beacon for new recruits to begin their digital tax journeys.