“Virtualisation” is a common enough term in technology circles. It describes how hardware is replaced with software to deliver a range of computing capabilities. In essence, it’s all about dematerialising what was physical and delivering it in a different way, for example via the cloud.  But for revenue agencies during the pandemic, virtualisation has taken on a different and broader meaning.  

No returns

There are three aspects of this virtualisation that I’d like to focus on. The first is the transformation of physical processes, such as the tax return. This was already happening well before COVID-19. The steps required to accurately record and report tax obligations are now often being captured digitally in real time, eliminating the need to prepare a periodic physical return at all.

The best example of this is in the payroll domain, where tax agencies are increasingly linking to employers’ systems to capture real-time tax owing and making sure the right amount is paid. That concept is being extended. For example, agencies are linking to taxpayers’ other potential sources of income, for example funds they may receive from letting a room through Airbnb.

And by linking to bank accounts through Application Programming Interfaces (APIs), agencies can capture additional tax information in real time and ensure that taxpayers are able to pay what they owe, as seamlessly as possible.

Smarter new communication channels

The second area of virtualisation is taking place in interactions with the revenue agency. Increasingly, we’re seeing the use of virtual agents and chatbots to handle routine enquiries from taxpayers, embedding these in websites and mobile apps to extend a more personalised and efficient service. Small businesses also now routinely use third-party software packages that integrate with a revenue agency, again reducing the need to make a call or go through traditional channels.

And more complex processes, such as an audit, are in scope too. These would previously have required a revenue agent to attend premises in person. They are now likely to be conducted remotely through analysis of a business’s tax systems, along with the use of collaborative software to enable a more complete, but nonetheless virtual, process between taxpayer and revenue official.

Opening up real opportunities through virtual teaming

Both trends have big implications for the third aspect of change, which is how the revenue workforce will change in the post-COVID-19 world. Standing up virtual teams is now possible through digital communications technologies. And that does not mean simply replicating the same teams from the pre-COVID-19 world through digital channels. Arguably, it’s now easier than ever to create cross-functional collaborations where the right blend of skills and know-how can be brought together to focus on a specific problem. With physical co-location no longer an impediment, virtual teams can gather almost at will and be stood down equally fast once a particular project is complete.

That ability to coalesce around an issue rapidly is crucial in a policy and business environment that is getting faster and more complex all the time. Speed to delivery comes from the ability to operate in a more agile way. The right teams at the right time, with every team member able to work from anywhere, is a key ingredient. Add the ability to easily share information, along with common tools and processes, and the ability of revenue agencies to respond in a fast-changing world can take a big leap forward.

The key question to ask now is: what practical steps can agencies take to capitalise on and harness the virtual world to their advantage? My view? It’s too good an opportunity to miss.

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David Regan

Managing Director – Consulting, Revenue Lead

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