We’re doomed, doomed I tell you

Aug 16, 2018

Sunday Business Post, 12 August 2018
There is a website called willrobotstakemyjob.com, a visit to which could cheer you up greatly or make you profoundly gloomy, depending on your chosen career.  It's an output from the Martin School at the University of Oxford where researchers are looking at how susceptible some jobs are to computerisation.  According to the research, if you're employed in any area which requires analysis or creative thinking, your job should be OK.  On the other hand, if your profession requires routine, repetition and is largely rules based, you're in trouble. 

This analysis suggests that the outlook is particularly grim for people in the accountancy profession.  It's even worse for those specialising in doing people's tax returns, where the suggestion is that this kind of work will be almost entirely replaced by automation.  Of course such predictions can be wrong.  A greater possibility is that they may also miss the evolving nature of professional work.  For example there aren't nearly as many fax machine installers now as there were 25 years ago.  But equally there is a significantly larger number of wifi engineers. 

The encroachment of automation already on the tax profession is very real.  It is most pronounced in China and in some of the emerging economies in Eastern Europe.  Starting off from a relatively low base, revenue authorities in these countries have invested heavily to automate tax returns, calculation and charging processes from start to finish.  

The UK revenue authority HM Revenue and Customs is developing a particularly ambitious project called Making Tax Digital.  Their notion is that over the next several years, all businesses of any size will have to have their accounts packages fully integrated with the tax assessment and collection systems.  This will ultimately eliminate the need for tax returns of all types – corporation tax, VAT, PAYE and the like – for most businesses.  The potential for under declaration and evasion will, the UK revenue authorities believe, be significantly reduced through this new technology. 

On this side of the Irish Sea, the Irish revenue will be implementing PAYE modernisation with effect from next January.  This project also involves systems integration – this time between an employer’s payroll system and Revenue's records.  It's not quite true to say that Revenue will become payroll operators for the nation, but it is not too far off the mark.  Every time an employee joins or leaves the company, Revenue’s systems will be automatically updated.  This is a considerable additional compliance burden on Irish businesses, which cannot entirely be automated away. 

Automation isn't the cure for all ills when it comes to tax administration.  We are some distance from a situation where the machines will do all the calculations, no matter how complicated the underlying tax policy, and the current position in the UK bears that out.  The UK tax self-assessment system is highly complicated in comparison with most other systems in developed economies.  Recognising that, the UK government has established Office of Tax Simplification to suggest ways of better coping with the (approximately) 1,000 different tax reliefs and allowances currently available to UK taxpayers.  The UK self-assessment systems are groaning under the weight of complexity and number crunching.  The list of circumstances which the UK revenue's tax software cannot deal with grows every year.  It’s tough being a robot sometimes. 

Businesses and the accountants who advise them will find themselves working within a gap created between the aspirations of automation, and the reality that politicians love tinkering with the tax system.  It's not just tax policy which is getting more complex; business practices are becoming more complex as well.  As business becomes increasingly international, the complexity of cross-border transactions grows.  New concepts must be addressed.  Revenue authorities across the world are only now issuing policy statements about how they would deal with crypto currency transactions, even though the likes of Bitcoin have been around for the best part of a decade. 

Even though the need for an accounting profession is not going to go away anytime soon, the skill sets will undoubtedly have to change.  Many of the skills currently applied in interpreting the law will have to be re-directed towards interpreting the particular analysis of the law being built into revenue authority computer systems.  The skills used in verifying the accuracy of tax returns will in future be used to verify that the calculations and charges imposed by Revenue properly reflect the underlying activity of the taxpayer and their business.  However the capacity of a professional tax advisor to negotiate with Revenue will remain unchanged.  The need to be able to analyse a new business venture and identify the tax compliance requirements will not change either. 

The result of all this effort is that tax evasion will become almost impossible as every transaction leaves an electronic footprint for Revenue to track.  Computers will do most of the tracking.  If the Oxford academics are correct, accountants and tax advisers are indeed doomed; but doomed I think only to a different way of doing their work in the future.  Many professions face much worse prospects. 

Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland