Register to get free articles
Want unlimited access? View Plans
Already have an account? Sign in
2024 has been a tumultuous year around the world, with billions of people, from the US to India to Ireland, the UK and beyond, all going to the polls. And whilst the full impact of the results are yet to be seen, in the face of any predicted change, it is wise to look forward and try to ascertain what trends will most shape the year to come. When it comes to the tax and accountancy sector, we have seen the ongoing development of several hugely influential technology factors over the past twelve months. Let’s look ahead and see what we can expect next.
Artificial Intelligence
Since ChatGPT launched to enormous fanfare just over two years ago, AI has played an increasingly active role in our working lives. In the early days, AI was a way to automate tedious, but predictable, tasks. However, we are now seeing it bloom into a much more productive and autonomous tool.
While mass adoption hasn’t occurred yet, many organisations are investing in AI to improve efficiency, accuracy and decision-making. As AI models continue their rapid evolution, expect more areas of the financial industry to rely on it, not just for grunt work, but for far-reaching strategic decision-making.
Compliance and Regulation
Compliance has always been a top priority for tax professionals and 2025 will be no different. New mandates and regulations, such as Pillar Two, are pushing businesses to adopt advanced technology solutions to guarantee they meet the rules. Pillar Two requires reporting already and compliance by 2026, prompting companies to start their preparations now, if they haven’t already.
The complexity and scale of such regulations demands the use of dedicated technology to ensure compliance. This proactive approach contrasts with previous years where businesses often delayed technology adoption until the last minute, leading to stressful and occasionally unsuccessful deployments.
Market Consolidation
An increase in mergers and acquisitions, driven by private equity investments, is reshaping the industry. Tax and accountancy markets are seen as ripe for efficiency improvements and margin enhancements. Through the shrewd implementation of technology, investors are aiming to streamline their operations, while integrating regional players, following the successful playbook used in other professional service industries, such as dentistry and veterinary practices.
Consolidation is all about taking advantage of synergies, such as reduced overhead costs and the sharing of best practices and technology across merged entities. By combining resources and expertise, consolidated firms can offer more comprehensive services and improve overall efficiency. Expect to see much more of this as smaller accountancy firms are acquired by competitors.
New Business Models
More modern approaches to how we do business are taking over from traditional methods. So, the old, tried and trusted time-and-materials model is giving way to usage-based pricing and outcome-focused engagements. Many clients now prefer paying for results rather than the hours worked, which means firms need to adopt new technology to accurately measure output.
At the same time, new technology solutions, such as AI, are significantly changing how we work and how long certain tasks take to complete. That means employees can focus on higher-value, more strategic tasks, improving margins and customer satisfaction.
Hybrid Working and Beyond
In the wake of the pandemic, working from home and hybrid working have become commonplace for most white-collar workers. However, many argue that this new paradigm presents challenges when it comes to maintaining productivity and performance standards.
Effective performance management and clear benchmarks are therefore necessary to ensure employees can meet the expected standards. It is worth bearing in mind that the constant connectivity required by hybrid working – facilitated by technology – can also lead to increased mental health issues among employees. Employers must focus on mental well-being and create support systems to help employees manage their work and personal lives effectively.
The Role of Technology
Technology has been a constant in the accountancy world since the invention of the abacus around five thousand years ago in ancient Mesopotamia. Today, initiatives such as Making Tax Digital and Pillar Two continue to drive the adoption of new technologies that will provide a competitive advantage or enable compliance. AI is perhaps the most potent example of the power of technology, offering impressive tools to navigate the complexities of modern tax regulations and business environments.
Looking ahead, the demand for advanced technology in the tax sector is expected to grow as regulations become more complex and the need for efficiency increases. 2025 will no doubt see businesses continue to invest in technology solutions that will improve resilience, boost productivity and ensure regulations and obligations are met. As tax professionals continue to adapt to the shifting landscape of our modern times, integrating the best technology has to offer will stand you in good stead for 2025.
