Challenges and Opportunities of Interim VAT Management
Suddenly finding yourself without a key part of your tax department can be a problem particularly in the middle of a major international merger. Taxand explores how tax payers can benefit from interim VAT management in emergency situations and how it differs from companies' more common experience of secondment.
'The two are obviously hugely different,' Richard Baxter, Managing Director, Taxand UK says. 'One is immediately concerned with the practical rather that the theoretical; one has immediate access to the wider decision makers and there is a great deal more to think about upfront that just being technically right or wrong.'
Mergers and Emergencies
'I've had many experiences in my past professional life over the years where I've been asked by a client to research something,' says Baxter. 'You do your research impeccably well. You give them the answer and you are very happy with your work. Then you met them six months later and they never did it. Why not? Because 'it was too difficult to do' or 'our IT department had a problem'.
Interim management versus secondment
'We were appointed as technical experts but also as managers within the business,' says Baxter 'It makes a huge difference to what can be achieved in short periods of time when the business for one reason or another is facing changes.'
'I think about things differently now,' Baxter says. 'The little unpredictable events that clients find hard to manage are at the forefront of everyone's thinking.'
'If you have one entity but it has multiple VAT numbers a, then plain vanilla accounting systems handle it with difficulty because the system can't tell where the VAT should be accounted for,' says Baxter. You have to build processes and ways of dealing with that. Some system vendors actually create a module to deal with this, but you can't buy the module and implement it in two weeks when your whole plan has been built on something different.
'Tax team and IT have historically not understood one another,' says Baxter. 'Tax departments have not often been a stakeholder in how accounting systems get built for example. We made sure Tax was part of that process. Very few companies do that.'
Taxand's work in many parts of the world has gone from managing companies going through change to managing countries going through change.
'I am working both in Europe and the Caribbean in interim roles helping states, including their tax authorities, become more competitive internationally and work more productively with Taxpayers,' says Baxter.
'There are certain types of situation which lend themselves to this approach and businesses should be aware of it and consider it when going through periods of significant change.' says Baxter.
First published in the International Tax Review, 1 April 2012