Indirect Tax

Survey 2020
May 2020
 Introduction and executive summary

Introduction and
Introduction and I am delighted to present the findings of Deloitte’s 2020 Indirect Tax Survey. We undertook the survey
executive summary
summary in order to understand and share priorities that our clients have. The nearly 60 businesses that took
part in the survey told us the following:
Range of respondents

VAT can be a busy but

• They have big responsibilities! – most of the respondents are employed by large multi-national
lonely existence! organisations but work in relatively small teams responsible for accurately reporting very large
amounts of tax.
VAT and GST are
• VAT is truly a global tax – two thirds of respondents have responsibilities for managing indirect taxes
global taxes
outside of the UK.
Top of the ‘to do’ list • Getting it right continues to be the main aim of indirect tax managers – compliance and improving
The boardroom agenda
systems were the overwhelming priority of respondents.
• Businesses adopt a variety of approaches in ensuring they report indirect tax liabilities correctly –
UK business have a good there is no clear trend to insourcing, outsourcing, centralising or decentralising indirect tax
relationship with HMRC
compliance.
on VAT
• Indirect tax is a boardroom issue for most organisations, with the VAT and duty implications of Brexit
Approach to indirect being a significant reason for this.
tax compliance
• Pleasingly, the quality of respondents’ relationships with HMRC is both high and stable.
Use of technology We hope the results of the survey will help you to benchmark your current approach to managing
applications for VAT
indirect taxes – we look forward to discussing them with you. Finally, thanks so much to the clients who
compliance
took part in our survey. We appreciate your business and the time you took to share your views with
Priorities for Making us.
Tax Digital
Daniel Barlow
Head of UK Indirect Tax
© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 2
 Range of respondents

Introduction and What is the turnover of the organisation(s) for which you The majority of
executive summary are responsible?
respondents work in
Range of respondents
respondents large global businesses.
VAT can be a busy but 9% 7% 11 % 33 % 7% 33 %
Almost three-quarters of
lonely existence!
respondents work in businesses
VAT and GST are with annual turnover in excess of
global taxes £1 billion, while 62% were
£0 – £250m £251 m – £501m – £1,001m – £5,001m – £10,001m plus responsible for VAT and GST
£500m £1,000m £5,000m £10,000m
Top of the ‘to do’ list accounting outside of the UK.

The boardroom agenda

UK business have a good Are you also responsible for VAT/GST compliance and accounting
relationship with HMRC outside of the UK?
on VAT

Approach to indirect Yes No

tax compliance 62% 38%

Use of technology
applications for VAT
compliance

Priorities for Making

Tax Digital

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 3
 VAT can be a busy but lonely existence!

Introduction and How many VAT/GST registrations are you responsible for? The majority of indirect
executive summary tax professionals are
1 to 5
Range of respondents 41% responsible for multiple
VAT can be a busy
busy but
but
VAT and GST
lonely existence!
existence! More than 100 registrations.
4%
VAT and GST are
51 to 100 6 to 10 However, over a quarter of
global taxes 15%
7% respondents are the only person
Top of the ‘to do’ list responsible for indirect tax in
their organisation.
11 to 50
The boardroom agenda 33%

UK business have a good

relationship with HMRC
on VAT How many staff are in your organisation’s indirect tax team?
One
Approach to indirect 26%
tax compliance
More than Five
Use of technology 15%
applications for VAT
compliance

Priorities for Making

Tax Digital
Two – Five
59%

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 4
 VAT and GST are global taxes

Introduction and For those with responsibilities outside the UK, what areas do you have The popularity of VAT and GST
executive summary responsibility for? with governments around the
world is reflected in the fact that
Americas EU
Range of respondents 62% of respondents have
38% 97% responsibility for managing VAT
VAT can be a busy but and GST obligations outside
Europe outside EU
lonely existence! of the UK.
56%
VAT and GST
GST are
are These responsibilities are not
global taxes
taxes confined to the European Union –
where almost all of those with
Top of the ‘to do’ list international remits have
The boardroom agenda responsibilities.

UK business have a good Many Middle East states have VAT

relationship with HMRC and 68% of those with
on VAT international remits have
responsibility for VAT in the
Approach to indirect region. Interestingly, almost half
tax compliance of respondents with international
remits have responsibilities for
Use of technology Asia Pacific VAT and GST in Africa.
applications for VAT 53%
compliance The work of a VAT professional is
Africa Middle East truly global!
Priorities for Making
Tax Digital 47% 68%

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 5
 Top of the ‘to do’ list

Introduction and For the next 12 months, please select the top three of the following Although 60% of
executive summary VAT/GST priorities for which you are responsible
respondents do not
Range of respondents Compliance 16%
44% have a written VAT
13%
VAT can be a busy but
strategy, respondents
9%
lonely existence! Improving systems 29%
27%
are clear as to their
VAT and GST are Implementing technology solutions for 15% priorities.
22%
indirect tax compliance and management 15%
global taxes
Compliance and improving VAT
13%
Top of the ‘to do’
do’ list
list Preparing for Brexit 9% accounting systems are top
9%
priorities. Brexit is one of the top
The boardroom agenda 7% three priorities for 31% of
Dealing with indirect tax disputes 9%
2% respondents.
UK business have a good Increasing the profile of indirect tax within 2%
relationship with HMRC 4% Our survey took place prior to the
the business 18%
on VAT COVID-19 pandemic. We assume
Successfully dealing with tax authority 5%
inspections
4% that management of cash flow is
7%
Approach to indirect now a much higher priority.
tax compliance Improving relationships with tax authorities 4%
0%
5%
Use of technology 0%
applications for VAT Other
2%
5%
compliance
2%
Cash flow management 0%
Priorities for Making 2%
Tax Digital 0%
Reducing tax paid 2%
0%

Rank 1 Rank 2 Rank 3 Top three priorities

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 6
 The boardroom agenda

Introduction and Has VAT been discussed by your organisation’s board or senior VAT has been discussed
executive summary management in the last 12 months?
by the board or senior
Range of respondents management for 75% of
VAT can be a busy but
Yes No Don't know respondents, with
75% 9% 16%
lonely existence! Brexit a driving force for
VAT and GST are that discussion.
global taxes
We would expect to see this
Top of the ‘to do’ list Please indicate what issues have been discussed? continue during the Brexit
transition period.
The boardroom agenda
agenda
Brexit planning 63% VAT compliance and Making Tax
UK business have a good Digital have also led to senior-
relationship with HMRC Compliance and automation 39% level discussions.
on VAT
Making Tax Digital requirements 34%
Approach to indirect
tax compliance Queries raised by HMRC / other tax
34%
authorities
Use of technology
applications for VAT VAT issues in other jurisdictions 24%
compliance
VAT-driven savings opportunities 17%
Priorities for Making
Tax Digital Cash flow management 7%

Other 12%

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 7
 UK businesses have a good relationship with HMRC on VAT

Introduction and How would you currently describe your organisation’s relationship Over 75% have a good
executive summary with HMRC?
or excellent relationship
Range of respondents Excellent 18%
with HMRC.
VAT can be a busy but In over 90% of cases, the
lonely existence! Good 58% relationship has remained the
same over the past 12 months.
VAT and GST are Average 22%
global taxes Positive influences on the
Poor 0% relationship include having open
Top of the ‘to do’ list and regular contact, especially
Don’t know 2% with a CCM, and having a good
The boardroom agenda
compliance history. Conversely,
UK business
business have
have aa good
good lack of a CCM or a change in CCM
relationship with
relationship with HMRC
HMRC can be negative factors in the
on VAT relationship.
How does your current relationship with HMRC compare to the last
12 months?
Approach to indirect
tax compliance

Use of technology
applications for VAT
compliance
Better Stayed the same Worse
Priorities for Making 7% 91% 2%
Tax Digital

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 8
 Approach to indirect tax compliance

Introduction and How centralised is your organisation’s approach to indirect There is no one size fits
executive summary tax compliance?
all approach to indirect
Range of respondents 42% tax compliance.
VAT can be a busy but 29% If there is a trend, it is that the
lonely existence! most common approach is to
16%
13% centralise indirect tax compliance
VAT and GST are and to perform this in-house.
global taxes Predominantly Mix of centralised and Predominantly Don’t know/Not
centralised (indirect decentralised decentralised (indirect applicable However, 45% of respondents
Top of the ‘to do’ list tax returns for many tax returns are
operate a decentralised approach
countries are prepared prepared in the same
at a small number of country as the tax to indirect tax compliance, to
The boardroom agenda
centralised locations) return relates to) some extent. In addition, a third
UK business have a good of respondents outsource their
relationship with HMRC indirect tax compliance to a third
on VAT What best describes your organisation’s approach to indirect party, to some extent.
tax compliance?
Approach to
to indirect
indirect There is no clear trend to follow in
tax compliance
compliance adopting an approach to indirect
tax compliance – each business
Use of technology 67% 7% 26% tends to have a model and
applications for VAT approach that fits its own
compliance circumstances.

Priorities for Making Predominantly insourced (indirect tax returns are prepared by individuals and teams within
Tax Digital our organisation)

Predominantly outsourced (indirect tax returns are outsourced to a third party to complete)

Mix of insourced and outsourced models

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 9
 Use of technology applications for VAT compliance

Introduction and
executive summary

Range of respondents
Which software does your organisation use to prepare returns? Our survey indicates
VAT can be a busy but
lonely existence! that the vast majority of
Microsoft Excel 87% businesses prepare their
VAT and GST are
global taxes VAT returns by taking
ERP systems (SAP, Oracle,
Top of the ‘to do’ list
PeopleSoft, Sage, etc.) 84% data from their ERP
Specialist automation software system and then using
The boardroom agenda (ONESOURCE Indirect Tax
Compliance, Avalara, Deloitte ITC,
24% Excel to convert the
UK business have a good Sovos, etc.) data into a VAT return.
relationship with HMRC Bespoke in-house designed
9%
on VAT applications

Approach to indirect
Other 4%
tax compliance

Use of technology
technology
applications for
applications for VAT
VAT
compliance

Priorities for Making

Tax Digital

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 10
 Priorities for Making Tax Digital

Introduction and What is your main systems concern with MTDfV compliance? Since this survey was undertaken,
executive summary HMRC have announced that
Having compliant digital links 48% businesses now have until their
Range of respondents first VAT return period
Quality of the underlying data used 35% starting on or after 1 April 2021
VAT can be a busy but Digital submission of the VAT return to comply fully with MTD
lonely existence! 9%
via an API link requirements and implement
Managing digital records 6% digital links.
VAT and GST are
global taxes Managing the agent process 2% As respondents’ main priority in
implementing MTD requirements
Top of the ‘to do’ list is having compliant digital links in
The boardroom agenda their VAT accounting records,
What is your intended approach for meeting the requirements the deferral for at least six months
UK business have a good of MTDfV? will be welcome, although as
relationship with HMRC many projects will already be in
Reviewing the existing set-up, e.g.
on VAT 60% progress, businesses will need to
spreadsheet improvements
decide whether it will be most
Approach to indirect Using existing ERP/finance systems 44% efficient to complete them as
tax compliance Using simple API submission scheduled, and allow sufficient
42%
software in with current set-up time for implementation and
Use of technology testing.
Investing in tax compliance software 27%
applications for VAT
compliance Outsourcing the filing 11% MTD has caused over a third of
respondents to focus on the
Priorities for
for Making
Making Don’t know/Not applicable 6% quality of the underlying data
Tax Digital
Digital used to prepare VAT returns.
Data wrangling solutions (e.g.
4%
Alteryx, Cortex, Trifacta, etc.)

Other (Please specify) 2%

© 2020 Deloitte LLP. All rights reserved. Indirect Tax Survey 2020 11
This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the
contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in
this publication.

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