How to navigate indirect tax challenges in technology
If your indirect tax function is constantly reacting to issues, under-resourced, and exposed to significant risk, you are certainly not alone in the UK technology sector. Our latest infographic, “Navigating indirect tax challenges in Tech,” uncovers surprising insights into the true state of play for the Technology, Media, and Telecommunications (TMT) sector.
Many indirect tax departments face a silent crisis, often overwhelmed by manual processes, limited capacity, and increasing audit scrutiny, leading to sizeable penalties and operational disruption. There are several persistent obstacles inhibiting the automation of indirect tax within TMT businesses:
- Reliance on manual processes and spreadsheets remains prevalent, leading to inefficiencies, errors, and a lack of strategic visibility.
- Resource constraints mean professionals are pulled into firefighting, responding to compliance deadlines and audits rather than planning proactively for future challenges.
- Rapid regulatory and digital reporting changes—such as those related to the Making Tax Digital (MTD) for VAT initiative—make it difficult for teams to remain fully compliant without adequate technology investment.
- Fragmented data across disparate systems hinders automation and data integration, further impeding the transition to strategic, value-adding activities.
- Underinvestment in tax technology often stems from misconceptions that automation is solely a compliance expense, rather than a business enabler capable of reducing risk and supporting broader commercial objectives.
The impact on teams is significant
- Departments working reactively experience higher exposure to audits and penalties, placing extra pressure on already stretched resources.
- Lack of automation affects not only today’s performance but also hampers talent retention and upskilling, as professionals remain stuck in routine compliance rather than developing advisory and strategic skills required for the digital future.
How to be a leading indirect tax team
If you are curious how your department’s experience compares to industry trends, recent research among tax professionals found that only a small minority consider themselves advanced in their use of tax technology. The majority are only just beginning to automate manual processes, and many are seeking ways to move beyond these persistent challenges.
To move ahead, progressive indirect tax teams within the UK’s technology sector are:
- Investing in end-to-end automation solutions for VAT, e-invoicing, and related compliance processes.
- Centralising tax data to create a single source of truth for compliance and reporting.
- Enhancing their capability to respond to real-time regulatory change.
- Shifting from firefighting to strategic planning, thereby transforming indirect tax from a cost burden into a business asset.
Your team can compare its current state with industry benchmarks and explore practical steps for transformation by reviewing current sector infographics and reports dedicated to navigating indirect tax in UK tech businesses.
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