Managing VAT | In-house, hybrid or outsourced solutions

 

Companies today face significant challenges around compliance, reporting, and providing strategic advice. Finding the right balance between in-house, hybrid, or outsourced tax management solutions is critical to maintaining compliance and staying ahead of the regulatory curve.. 

 

As Tom Payne, Director at Abaqus Ltd, highlights: "The right mix of internal and external resources can make a huge difference in maintaining VAT compliance while managing costs and control. It’s about finding that sweet spot that works for your business." 

 

A hybrid team is often the most effective method of managing VAT compliance. According to research, 58% of businesses employ both in-house teams and outsourced support to handle indirect tax. This model works well for organisations that operate across multiple markets but may not be large enough to justify individual teams for each jurisdiction. By combining in-house expertise with external service providers, businesses can address both cost efficiency and operational effectiveness. 

 

A hybrid model allows in-house teams to focus on core tasks, while outsourcing specific projects or activities in jurisdictions with limited operations. This approach provides flexibility and access to external expertise without the complexity of managing large teams internally. However, it also brings challenges such as potential miscommunication between internal and external teams. Establishing clear communication channels and regular check-ins can help mitigate these issues. 

 

For larger organisations, a fully in-house indirect tax team can offer complete control over data and processes. This allows for improved accuracy, efficiency and a deeper understanding of business operations. In-house teams benefit from institutional knowledge, which contributes to better decision-making. 

 

However, managing a fully in-house team requires significant investment in recruiting and retaining qualified professionals. As Tom points out: "A fully in-house team is best suited for large-scale operations that require tight control, but it comes with the challenge of balancing resource needs with operational capacity." 

 

For smaller organisations, outsourcing VAT compliance may be a practical solution. It reduces staffing costs and provides access to specialised expertise without the need for internal recruitment. Outsourcing is particularly beneficial when there are gaps in indirect tax or technology skills. However, the downside is that outsourced teams may lack specific business knowledge, which can affect the quality of data management and control. 

 

With the increasing complexity of indirect tax and the rise of e-invoicing and real-time reporting mandates, businesses must ensure outsourced teams have a deep understanding of their operations to maintain data quality and ensure compliance. 

 

The ideal model for VAT management depends on an organisation’s size, tax capacity, geographic reach and strategic goals. Businesses should evaluate these factors thoroughly to identify the best approach. Leveraging the right software to streamline real-time and periodic tax reporting can simplify compliance, especially as tax regulations vary across countries. 

 

 

In conclusion, whether opting for in-house, hybrid, or outsourced VAT management, the key to success lies in understanding your organisation’s needs and implementing a solution that balances cost, control and compliance. 

 

More information can be found on the government website.