2023 State of the Tax Professionals Report

The tax industry is undergoing significant changes, with a shift in priorities towards efficiency and client services. By adapting to these changes and staying ahead of industry trends, your tax practice can position itself for continued success and growth.

The "2023 State of the Tax Professionals Report" by Thomson Reuters, provides an in-depth overview of the challenges and trends.

AccountingWeekly (Link), an esteemed publication by the Chartered Institute for Business Accountants NPC (CIBA), offers insights on adapting your tax practice strategy based on the findings from the "2023 State of the Tax Professionals Report.

Key Findings from the Report:

1. Shift in Priorities: In 2023, efficiency has emerged as the top strategic priority for tax firms, followed by client service, growth, and talent acquisition. The focus on talent, which was the top priority in 2022, has slipped to fourth place in 2023. This shift indicates a change in the challenges faced by tax firms.
2. Strategic Priorities by Firm Size: Large firms (30+ people) prioritise talent acquisition and retention. Midsize firms (4-29 people) focus on efficiency and client service. Small firms (1-3 people) emphasize client service and growth.
3. Efficiency and Client Service: The renewed focus on efficiency suggests a potential industry-wide reset, possibly in anticipation of economic uncertainties. The emphasis on client service has risen, especially in midsize accounting firms, which see expanding their services as a key growth strategy.
4. Automation and Technology: Most firms have automated some of their tax workflow processes. Only 11% of midsize and large firms use no automation. The U.K. and Latin America have higher automation levels compared to the U.S. and Canada.Firms are prioritizing the improvement of current workflow systems and getting more out of existing systems over investing in new technology.
5. Client Services: Clients are increasingly seeking advisory services in addition to basic accounting and business services. Over 93% of respondents indicated that their clients are looking for some form of advisory services, with 65% indicating a strong demand.

Recommendations for Adjusting Tax Practice Strategy:

1. Focus on Efficiency: Invest in technology and tools that can automate routine tasks and streamline workflows. Regularly review and optimize processes to ensure maximum efficiency.
2. Enhance Client Services: Expand the range of services offered to include advisory services, tax strategy, and financial planning.Invest in training and development to equip staff with the skills needed to provide value-added services.
3. Talent Management: While the focus on talent acquisition has decreased, it remains crucial for large firms. Consider strategies for retaining and developing existing talent.Offer continuous training and development opportunities to ensure staff are equipped to handle evolving client needs.
4. Leverage Technology: Explore opportunities to get more functionality out of existing systems. Stay updated with the latest technological advancements in the tax industry and invest in solutions that can provide a competitive edge.
5. Client-Centric Approach: Regularly gather feedback from clients to understand their evolving needs and expectations. Personalize services and offer tailored solutions to meet individual client requirements.
6. Leadership and Change Management: Appoint dedicated leaders responsible for driving efficiency initiatives. Ensure effective change management strategies are in place when implementing new processes or technologies.

Practical Examples:

1. Shift in Priorities:Example: A mid-sized tax firm that previously invested heavily in recruitment campaigns in 2022 might now, in 2023, redirect its budget towards process optimisation tools and client relationship management software.
2. Strategic Priorities by Firm Size:Example: A large tax firm might host a series of recruitment drives and talent development workshops, while a small firm might focus on expanding its digital marketing efforts to attract more clients.
3. Efficiency and Client Service:Example: A tax firm might implement a cloud-based accounting software that automates data entry, allowing accountants to spend more time on advisory roles and less on manual tasks.
4. Automation and Technology:Example: A tax firm in the U.S. might look at the automation practices of firms in the U.K. and adopt similar technologies, such as AI-driven tax prediction tools or automated client communication systems.
5. Client Services:Example: Recognizing the demand for advisory services, a tax firm might launch a new consulting division, offering clients insights into tax-saving strategies and financial planning.
6. Focus on Efficiency:Example: Adopt tools like QuickBooks or Xero that can integrate with bank accounts, automatically categorizing transactions and reducing manual data entry.
7. Enhance Client Services:Example: Introduce monthly financial health check-ups for clients, offering insights into their financial standing, potential tax-saving strategies, and investment advice.
8. Talent Management:Example: Organize quarterly training sessions for staff on the latest tax laws, software tools, and client service best practices.
9. Leverage Technology:Example: Implement a client portal where clients can upload their documents securely, view their tax filing status, and communicate directly with their assigned accountant.
10. Client-Centric Approach:Example: Conduct bi-annual feedback surveys with clients to understand their needs better. Use the feedback to introduce new services or refine existing ones.
11. Leadership and Change Management:Example: When introducing a new software tool, organize a workshop led by a change management specialist to ensure smooth adoption by the staff. Provide continuous support and training sessions to address any challenges faced during the transition.

By incorporating these practical examples into your tax practice strategy, you can ensure a more hands-on approach to meeting the evolving needs of the industry and your clients.