A Note On Automation

The integration of the future tax system.

"We all started somewhere else." Whenever someone asks how we became futurists, this is normally how the explanation starts. There is almost a sequence of events. We start out fairly junior in our chosen profession. Through a combination of exam success, hard work, and, often, just luck, we become more senior at what we chose to do. As we become more senior, the numbers become larger and the time horizon of our projects becomes more distant into the future. Eventually, the techniques we learned when training don't quite adequately serve us in our roles and we find ourselves using futures techniques. Before you know it, you have become a futurist.

In my case, I entered the world of banking in 1976, starting out with Midland Bank, now part of HSBC. I wasn't temperamentally suited to branch banking so we parted company after a few years. By that time, the die had been cast. I stumbled along my way through economics, the law, and back to finance again. During this time, I had accumulated a number of professions, one of which was as an accountant.

If you are to be an accountant, you need to stay on top of developments in the world of accounts preparation and taxation. This is achieved through a compulsory programme of CPD (Continuing Professional Development). I found myself at a CPD study day last week, which was looking at 'Making Tax Digital', the latest idea from HMRC to bring the world of tax into the modern age.

Some of the presentations were a bit slow, but that allowed my mind to wander, and I found it wandering over how the technology of the finance function had changed over the course of my working life. When I first started in 1976, accounts ledgers were being transferred from paper to digital format. Small accounts were run on a mainframe computer the size of a large bedroom. By the time we reached the 1980s, we were working on PCs where the size of the storage media was 20Mb (I think that I might still have some of those floppy disks).

The next big evolution was in the software we used - dedicated accounting packages and spreadsheets. I can remember this first spreadsheet we bought in 1984 - Lotus 123. We were working on a trajectory where the computing power was becoming smaller, faster, and cheaper. With the advent of laptops first, and later the internet, by the 1990s we were mobile as well. By that time, I had struck out on my own, but we were still operating with a staff.

The next wave of change was institutional. The Inland Revenue (HMRC as it is now) first introduced self assessment. In those days we had to complete the tax returns on paper and deliver them to HMRC for input onto the mainframe of the tax authority. Eventually the penny dropped. We were drafting the tax returns on computer programs, printing them, and HMRC were then re-typing them into the mainframe. On-line filing followed next.

In a progression that has a clear path, the next step is Making Tax Digital. This is where all of the computers in the system (client computers, our computers, and HMRC computers) are all linked up using the cloud, over the web. There are many fearful about this next step, but they are mainly expressing a fear of change more than anything else. The automation and mechanisation that has occurred to date has allowed me to dispense with a staff, and I see the concern of others that we might be the next to be dispensed with.

I don't share that fear because I ask my clients one simple question: Do you want to give HMRC a blank cheque over the tax you are liable to pay? If they say not, then there is a demand for me, or someone like me. Someone who can make the numbers sing in a way that is pleasing to them whilst satisfying the requirements of HMRC. Our work has a functional aspect, but it also has a creative side as well. My clients are hiring this creativity.

Frey and Osborne reckon that we have a high probability of technological redundancy through automation (98%), although I can't find a time horizon for this. That might be true. Ours is a profession where some resist computerisation. Some prefer to retire rather than embrace change. Some may be just unlucky. Myself, I have no fear because there will always be a demand for someone who can make numbers sing.

Stephen Aguilar-Millan

© The European Futures Observatory 2017