Casper Winkelman, Solution Principal, Sovos
The digital transformation of tax is both a global and unstoppable trend, with continuous compliance advances around the world the order of every passing day. In the UK, the frenzy around Making Tax Digital (MTD) has been pervasive for some time now. Originally announced in 2017, the initial deadline for the MTD mandate finally came into effect on 1st April of this year.
In the UK, the MTD journey has only just begun, with further work ahead to ensure that organisations are compliant. At its core, MTD aims to modernise the previously manual VAT return process for UK companies, with (amongst others) data sent via API into an HMRC portal, where it will be stored securely. Government-approved software enables this modernisation.
VAT-registered businesses with an annual turnover above £85,000 have been affected by the 1st April deadline. However, it’s important to note that this preliminary date is by no means the endgame for MTD. Rather, it’s a continually evolving process for everyone’s benefit. Further checkpoints — for example, the October deadline for ‘complex and specialist’ businesses — reflect the idea that this is just the beginning of MTD, a stepping stone to the next level.
To understand what MTD is laying the foundation for, it’s worth comparing developments overseas. After all, when looking at the bigger picture, it’s clear that MTD is not bringing anything particularly revolutionary to the table. Most recently, it was announced that the Indian government is forming a committee to explore how to introduce clearance e-invoicing or real-time reporting. As a manufacturing powerhouse, India is the latest country to join the global trend that originated in Latin America of digitally transforming tax.
In fact, Europe’s digital tax interest was piqued by the work of Latin American (LATAM) countries in relation to VAT reclamation. Back in 2003, these countries began the process of a more digitised and proactive reclamation, seeking to close the VAT gaps they were facing. Brazil, for example, established mandatory electronic invoicing and real-time reporting, meaning invoices had to be uploaded to a government platform and be approved. As a result, the health and cash reserves of the LATAM tax authorities enjoyed a monumental boost.
While it’s still early days and India’s committee is only now starting to examine other clearance countries, everything could move quickly in the wake of this — so UK companies need to prepare for these changes, should they wish to continue trading with India and other countries as part of a global supply chain. This is because the potential for e-invoicing compliance in India and around the world can impact multinational companies that have a manufacturing presence in these countries.
Closer to home different versions of this movement can already be seen in Spain and Hungary, as just two examples. In 2017, Spain brought in real-time VAT reporting; 2018 saw Hungary introduce real-time transactional reporting. As of January this year, Italy joined the digital tax movement by bringing in compulsory electronic invoicing for domestic business-to-business transactions, moving away from the previous business-to-government portal. Now, the likes of Greece, France, and Russia are pursuing innovation in stages — alongside many more tax authorities across the globe.
All of this is worth bearing in mind when considering the initial reaction to MTD in the UK, which was decidedly mixed at the time and hasn’t subsided since the system came into effect. For many, the system is a costly annoyance. Particularly within the SME community, some businesses have lamented that it disrupts a method of working that had not previously seemed problematic. Others have spoken about the hindering expense of new software.
Nonetheless, when examining the full story behind MTD, it’s apparent there should be a reframing of the topic and how the initiative is perceived by organisations signing up to it. Let’s not forget, MTD is about much more than merely the digitising of tax returns; instead, MTD will be the foundation for an evolution in UK taxation, future-proofing British businesses.
Bringing home the benefits
Framing MTD in this way fosters a fresh outlook on initial concerns about upgrading to new tax methods. First of all, implementing MTD brings several new and crucial advantages to taxation. Replacing manual processes with software greatly improves accuracy, minimising the chance of data going missing — HMRC will be able to spot any abnormalities much quicker than before. MTD also enables visibility into the state of tax throughout the year, which means that companies can see their tax status. The result is much more informed decisions regarding growth, courtesy of accelerated business processes.
Businesses that view MTD as one step on a journey towards a more efficient way of engaging with HMRC will find their finance teams bestowed with greater intelligence — useful, considering that HMRC can analyse a business any time for tax status. Although it’s understandable that many people (especially in smaller businesses) might feel alarmed by this change, those who invest time in selecting the right software for the job — while also engaging with expert providers to help them complete the transition — will reap the most rewards.
However, those who forget that the MTD journey is no longer voluntary do so at their peril: MTD is underway and HMRC has further plans to remodel the way in which businesses submit their tax returns. Company leaders can decide whether they want to crawl down this path or carve out a bold and proactive approach.
Next time the topic of MTD comes up in a meeting or as part of planning, finance leaders should ask themselves: ‘What can MTD do for me?’ — rather than worrying about what they need to do to comply with the system. Looking at how tax authorities are operating in geographies all over the globe, it’s clear that MTD is just the first mile of the marathon.
AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY
By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn
We’ve all heard the old saying “money talks.” Well when it comes to customer loyalty and retention, good customer experience talks much louder, with 30% of customers leaving a brand and never returning due to a bad experience.
The truth is, there are a lot of companies with similar products and services, but that doesn’t mean that differentiation is impossible. So, what’s the solution? For financial services, large and small, customer experience is becoming the key competitive differentiator and the best way to deliver an impactful experience is to empower customer-facing employees to do their best work. Artificial intelligence (AI) is enabling these employees to create remarkably better customer experiences, resulting in customer loyalty, advocacy, and overall growth.
For financial institutions that have been considering new strategies for improving the quality and efficiency of their customer experience, here are a few ways AI can enable them to deliver the “human factor” that good customer experience demands whilst ensuring customer facing employees can provide a more positive experience for customers.
Increase employee productivity
How much of employees’ time is spent searching for answers to questions? Do they ever have to put customers on hold or even step away to get additional help? AI helps provide front-line employees real-time guidance so they can spend less time looking for information and more time solving problems. An AI-powered chatbot, for example, can be listening in the background of a conversation helping point employees to the right data, solutions, and processes to resolve customer issues faster than ever before.
Deliver a consistent customer experience
When banking customers engage with their financial institutions, they measure the speed and accuracy of the service through two criteria. First, how quickly can the system access their account and deliver the correct information? Is it faster than a human could type it in and share it? And second, if they eventually do need to be connected to a live customer support agent, is their information captured and passed along accurately? AI technology takes those general queries off the customer support team’s plate, providing a quick, accurate, and effective response. If a query needs a more in-depth response, AI can hand it off to support staff to address.
Not only this but leveraging a centralised, AI-powered knowledge solution ensures every employee has access to the same, updated information, so no matter who the customer speaks to, they can be assured that employee responses are both consistent and accurate across the board.
Accelerating employee training and onboarding
Like any industry, employee turnover is inevitable and can be costly. But, not training new employees correctly or in a timely manner could be much more costly. When it comes to financial services there is a lot to learn, whether it is something simple like the process for checking an account balance to all the nuances associated with mortgage loans. AI can support on-the-job training by helping new employees answer questions confidently, correctly, and much quicker than they could before.
Improving employee satisfaction
Today’s banking customer has all kinds of new ideas about their banking experience. “The Amazon Effect” has successfully raised consumer expectations to the extent that a consistent, personal, and relevant experience is the new normal. As a customer, how many times have you been told “I’m sorry, I don’t know the answer?” Customers want solutions to their problems and employees want to be able to deliver those solutions as efficiently and effectively as possible. AI assisting in the background helps minimise those negative moments – making employees job easier, less stressful, and overall more enjoyable.
Identify knowledge gaps
Do you know all the questions employees are getting asked? Do you know what’s easily answered and what’s not? Real-time insights allow knowledge managers to keep up to date on frequently asked questions and gaps in current resources. This allows them to strategically improve or add content where needed.
Augmenting customer service
Whether talking with an AI chatbot or a personable customer service team member, the modern banking customer has high expectations for convenience, speed, and security. Which means that the technology you choose to deploy and how you deploy it is now just as important as who you hire and how you train them.
Today’s AI solutions won’t replace customer service agents or get in the way of the human factors that drive the customer experience. On the contrary, they augment it, allowing the business to do more without adding human resources. The higher the quality of a AI chatbot solution, the better it will be at taking the routine requests off the plate of customer service agents—giving them more time to provide a personalized and positive experience for customers.
TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC
By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants
The full impact of the COVID-19 pandemic is as yet unknown, but individuals have already begun to have their lives disrupted by the country’s economic shutdown, with retrenchments, salary cuts and forced unpaid leave making them take stock of their financial position.
The basic principles of financial planning are especially relevant at this time, but in the short term, cash flow is more important to many people.
To help safeguard you and your family’s financial security, here are some tips to follow to make sure you’re making your money work hard for you:
- Draw up a budget – this is especially relevant if you’re worried about possible retrenchment of yourself or your partner. This will help you know how much you need to cover your basic living expenses and where you can save money. Don’t only look at what you need to spend money on, but also when you think you will need that money. Perhaps you paid school fees upfront at the beginning of the year, or your car registration is only due again next year.
- Check your bank fees. Are you in the best structure for your needs? Are you paying for services that you never use? Consider moving banks to get a better deal.
- Banks have waived the Saswitch fee payable for withdrawing cash at another ATM other than your own bank, but if you’re doing this, be aware of when this switches back as you can end up paying almost double the bank fees.
- Did you know that you start paying interest immediately if you draw cash from a credit card and that you do not get three or six months’ interest free?
- Go through your house while you have extra time and identify potential items which you could sell, as this will free up cash.
- Where possible, pay cash for items as the interest rate on hire purchase items is very high and you pay around 20% more for those items than the sticker price. If you cannot afford the item and you don’t need it right now, wait.
- Look around for bargains online rather than driving around. There are some good sales on, and you can support businesses that need your help.
- At the same time, be aware of spending extra cash you could be saving towards your financial safety net. There are lots of deals available, so balance the need for the 70% off bikini or new laptop with being cautious about the future.
- Use store coupons and discount vouchers. The main food retailers have loyalty programme structures that can be tailored to your specific spending patterns. Make sure you claim point or vouchers but look out for monthly costs to belong to a rewards program. Ask yourself if your monthly savings validate the cost. Optimally a reward scheme shouldn’t cost you money.
- Check with your insurance company if your premium can be reduced because you’re driving less during lockdown.
- Check your current insurances. Do an insurance rebroke. Make sure you are covered for what you need and take things off the list that you do not have any more and add what you have bought since the last update. Make sure you are not under or over insured and that your premium is market related. The cheapest premium isn’t always the best so be aware of exclusions and excesses and make sure you can afford the excess if you need to claim.
- In most cases you can reduce your monthly insurance premiums by not having a cash pay-out in the future. If you want a pay-out, save the extra premium in an investment product, not a risk product.
- Be wary of consolidating debt. You might pay a lower interest rate but it might well be over a longer period so the total interest paid will be higher. If you have debt issues, set up a debt plan with dates and goals to reduce the debt little by little. Do not give up.
- Be aware that payment holidays are not a free loan, you still owe the money and you’re paying interest on it. Check with your service provider.
Remember that the pandemic will pass. Try not to panic as this may lead to rash financial decisions, which could have an impact on your finances later down the line.
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