Stay on Top of Tax Compliance

The Challenge

During the COVID-19 pandemic, a large consultancy moved its entire global workforce to ‘work from home’. To assist with this, they enabled the purchase of IT systems, peripherals and home office equipment on the company's part, with employees being reimbursed via the expenses system. This meant that large numbers of employees were generating company spend by purchasing equipment formerly sourced. Equipment provided to employees fell under the concept of a taxable benefit. The company planned to handle this using account codes and category codes. However, as the employees were not experts in the purchase of these categories, miscategorisation of items meant that this quickly became impossible to manage.

This produced an unacceptable level of both reputational and financial risk.

The Solution

The Tax Compliance module of PredictX’s Employee Generated Spend (EGS) solution was deployed on top of the expenses system. This module searches through transactions, using AI to identify what items are through searches on narrative and receipts, and recategorises them where necessary. As items are placed into a taxonomy, tax rules can be incorporated, allowing items where the correct tax has not been paid (and where it has been paid where it was not necessary) to be identified and redressed.

The Impact

This enabled the business to:

• Quickly manage the one-off purchases.
• Make the correct allowances for them and move smoothly to home working. 
• Allow the system to remain in place, scanning expensed transactions and highlighting potential tax issues to the Tax team.

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