10 Dec The Evolution of the Tax Professional
In our latest “insights” publication we are considering the topic of adaptation. BEPS 2.0, the impact of COVID-19 measures and the need for digital transformation as authorities’ increase their use of new technologies as they seek greater levels of transparency are some of the challenges the tax professional faces today. To navigate such hurdles, the profession must evolve to ensure they are aligned with what is expected from the tax function.
How have advancements in technology influenced what is required from the tax professional?
What can the tax professional be doing to ensure they (and the function) remain relevant and what qualities must they exhibit?
As the professional evolves, how are we re-addressing our view on the skills required to support our plans to build a resilient function which can partner the business?
Historically a thorough understanding of the tax code, regulations and case law formed the foundation of the tax professionals skill set. Today, what’s expected from the professional and the supplementary skills required to be effective have both evolved. Whilst the core technical experience remains key, an appreciation and an interest in technology and data analytics, process improvement & project management skills, a broad understanding of the business, as well as enhanced soft-skills have all emerged as being equally as important.
The tax function is hugely susceptible to advancements in technology given the requirement for the utilisation of large volumes of data. Technology and data analytics and their impact on the function is continually evolving, for the professional, an interest and a proactive mindset is therefore key to ensure they remain abreast of such changes.
I recently read an article by Geoff Peck of PawPaw Taxology titled “How far are you on your digital transformation journey?” which highlighted a key point, “business process automation is not digital transformation”. Whilst the former can lead to efficiencies, the latter, and I quote “transformation questions every part of that ecosystem, ransacks it, and then rebuilds it according to the new rules of digital tax”. If the function is to ultimately reach its objective of becoming digitally enabled, professionals must increase their understanding of, and their experience with, the tools available today.
Today’s focus extends far beyond tax planning. With functions under increased pressure to operate more efficiently at a time where pressure on both cost and headcount has never been more severe, the need for adaptation is clear. Problem-solving, project management and change management skills have all emerged as crucial components of the modern-day professionals skill set.
“Adaptation is key, tax professionals must ensure they up- skill and develop where required to ensure they remain both relevant & competitive.”
The emergence of new technologies and data analytics has and will continue to free-up time for the professional, allowing their attention to switch to gaining a more in-depth understanding of the overall business. Once equipped with such knowledge a closer alignment with key stakeholders outside of tax is possible, helping to position the function and the professional as a true “business partner”.
The modern-day professional faces a raft of new challenges; new legislative and regulatory developments (and their impact on risk management), emerging analytics, whilst ensuring tax is connected with broader finance transformation initiatives are some of the hurdles which must be overcome. No longer will an in-depth knowledge of the tax code be enough. Knowledge of the broader business will continue to play a key role in the professionals “tool-kit”.
“An in-depth knowledge of the organisation is vital to ensuring the tax strategy is built around the broader business strategy”.
Critical & Creative Thinking
Cognitive competence (for many, regarded as critical and creative thinking skills which facilitate effective problem solving and decision making) is a vital skill for the evolving professional. Whilst numerous papers and articles have highlighted the importance of such skills at a leadership level, my personal belief is one that these must not be overlooked at all grades of an organisation.
Of course, the balance between the professionals technical and leadership responsibilities will shift as they progress their career. However, those who offer a diverse perspective, supported by high- intellect and with an ability to influence confidently and credibly must be supported regardless of their position within the function. We must nurture such individuals who naturally exhibit the ability to influence, lead and develop those around them. This is especially important as the tax function continues to experience increased levels of visibility across the organisation.
For such professionals, they will be well- positioned to understand the complexities of tax, with an appreciation for how the function and the broader business influence one another. They will be well equipped to adapt to change, with an ability to communicate the benefits that the tax function brings to an organisation.
Highly specialised and historically poorly understood, the tax function has since positioned itself as an integral part of todays board room discussions, particularly around tax governance , transparency and brand protection.
For the professional, the importance of clear and effective communication has never been so vital; the ability to communicate the seemingly complex into the simple. It may not come as a surprise that a large number of organizational problems occur as a result of poor communication. Perfecting such a skill is a key component of professional success.
Strong communicators posses a heightened sense of situational and contextual awareness and have mastered the ability to transmit their message in a way which speaks to the emotions of their audience. The effective communicator focuses not solely on the message, but also in meeting the needs and the expectations of those they are communicating with. They possess an ability to read an audience by sensing their attitude, mood, values and concerns. The ability to adapt one’s approach when required is a much sought after skill. Tax professionals must prioritise such a skill if the function is to ultimately deliver on its objectives.
Emotional & Moral Intelligence
The importance of EI within a business context is well documented (see a former Insights article titled “A sense of humility, a path to effective leadership”). During times of increased risk, both organisational as well as reputational, one’s ability to engage, empower and lead is vital. One’s moral intelligence, i.e. integrity and humility are also both called into question. Exhibiting such qualities is vital when engaging and looking to enhance relations with key stakeholders.
“An ability to listen, forge relations and support the business is what’s needed from todays tax professional”.
When considering the above, it is clear the professional must focus their efforts on framing their experience and skills correctly, aligning with a number of key competencies, namely (i) Influence (C-Suite interaction and promoting a business case for change) (ii) Delivery (organisational strategy and risk management) and (iii) Relationship building (cross-functional partnerships). The approach of the interviewer will flex depending on the technical brief and the grade of the position, however, ensuring you have a selection of examples detailing your experiences across such competencies (where appropriate) is vital.
The question that I am often asked is how as leaders do we identify the individuals who can help the tax function and the business successfully navigate the challenges which lie ahead? As the skill set of the professional adapts, so must our approach to talent identification.
Such a debate often hinges on the grade in question. A solid technical foundation remains the foundation for any tax professional. Traditional sources therefore remain, university accounting/economics courses and specific tax programmes being the customary pools when it comes to new talent. Whilst emerging sources have looked towards graduates in IT who can fill the role of a dedicated tax technologist. For the more experienced, the additional risk management, project management and soft skills must be in evident.
Tax technical skills must be prioritised (and by no means fall secondary to the topics mentioned above), however we must, regardless of level, also focus our efforts on identifying those who are able to quickly adapt and who exhibit the qualities discussed in this article.
Whilst there is no “one-size fits all” approach, the technical brief, the grade as well as the chosen operating model and thus the overall structure of the tax department will greatly influence what skills we ultimately prioritise at interview.
Following the events of 2020, much uncertainty remains. What is clear is the need for the tax professional to evolve to ensure they remain relevant and for the tax function to ultimately support the business during such periods of instability.
Whilst more progressive tax departments are embracing digital upskilling and retooling, it is clear that the professional who offers purely a technical perspective is outdated and unsustainable. Tax professionals at all levels must adapt.
Knowledge of tax rules and regulations must remain, however, a learning mindset must be embraced at all levels when it comes to understanding new advancements in technology. The professional must also take a interest in the broader business, whilst look to further develop such skill as cognitive competence, communication and emotional/moral intelligence. By doing so, it will enable them to effectively adapt to change, positioning themselves as a key member of the function in its bid to support the business.