Digital Tax Transformation: Why Technology and Talent Must Evolve Together
By Finance

With HMRC and other global authorities pressing ahead with digital reporting, the spotlight is on how organisations and tax teams respond. Digital tax transformation is no longer a distant possibility. It’s happening now, and it’s affecting the way tax departments operate, the technology they use, and the people they hire.

Whether through Making Tax Digital (MTD), real-time reporting, or the growing use of AI and automation, tax leaders are facing increasing pressure to modernise. This transition will require more than adopting new software. It will mean building the right capabilities to manage risk, meet deadlines, and deliver real value to the wider organisation.

 

Understanding MTD for Large Businesses

MTD rules already in place for all VAT-registered businesses, but a bigger challenge lies ahead: the rollout of MTD for corporation tax.

There is no current timescale for MTD for corporate tax, however it’s important for businesses to be prepared as the intention remains to roll out MTD beyond VAT and Income Tax to cover limited companies. Under the requirements of MTD, companies will need to:

  • Maintain digital records of all transactions as well as some non-financial data
  • Provide quarterly updates of those to HMRC using MTD compatible software
  • File their annual corporation tax return using MTD compatible software

The challenge for many businesses is that they are still reliant on manual processes. Some are unsure about which platforms to use, or how to integrate them with their existing systems. Others face deeper challenges around digital literacy, fragmented data, and under-resourced teams.

These gaps aren’t just technical. They reflect a broader issue: tax departments haven’t always been set up for digital change. As a result, many organisations find themselves playing catch-up.

 

A Tax Function in Transition

Whether embedded within a corporate finance team or operating in a professional services environment, the role of tax professionals is changing. Traditionally focused on compliance, reporting, and year-end reviews, tax teams are now being asked to play a far broader role.

Today’s tax function is expected to deliver insight, manage risk in real time, and work closely with finance, technology, and data functions. All while navigating increasingly complex digital demands.

This shift is being driven by three powerful trends:

MTD and Real-Time Reporting
In-house teams must adapt to new filing rhythms and digital workflows. For example, under MTD businesses will be required to submit quarterly digital updates. This has real implications. Systems used for bookkeeping, VAT, payroll, and tax submissions need to speak to each other. Workflows must become more integrated. There is far less room for error, and fewer opportunities to catch mistakes before they’re submitted. Real-time reporting requires tight controls, integrated systems, and consistent collaboration with finance. For professional services firms advising clients, this adds pressure to deliver technology-enabled guidance and to help clients build readiness across their own finance and tax environments.

Tax Automation
Routine tasks such as data collection, reconciliation, and standard reporting that were once handled manually are being automated. This is improving accuracy and freeing up time, but it’s also changing the skillsets needed in both corporate and advisory roles. Teams now need professionals who not only understand the technical side of tax, but also how digital tools operate, and how to interpret and act on the outputs they generate. In practice, this means developing comfort with tax engines, dashboard reporting, cloud platforms, and increasingly, AI-enabled tools.

New Talent Demands
As automation increases and compliance becomes more streamlined; clients and stakeholders are looking to their tax teams for more strategic input. In-house, that might mean guiding cross-border structuring; analysing tax implications of M&A activity; or embedding ESG-linked tax metrics. In professional services, firms are under pressure to offer high-impact advisory services, delivered faster, with deeper technology integration.

This is where the gap is becoming most acute. According to the 2025 Thomson Reuters State of Tax Professionals report 26% of tax leaders say hiring and retaining better staff is their single biggest challenge. Tax functions now need people who can think commercially and work across disciplines. The ability to interpret tax legislation remains crucial, but it’s no longer enough. There’s growing demand for professionals who understand systems, can manage change, and bring a strong grasp of tax technology skills.

 

How to Prepare: A Roadmap for Digital Tax Transformation

If you’re looking to build a more resilient, future-ready tax team, it’s important to take a structured approach. Here’s a four-part roadmap that can help guide the journey:

People: Review Skills and Talent Plans
Start by assessing the current skillsets in your team. Where are the gaps? Do your people understand digital tax systems? Are they confident using new tools and platforms? Alongside internal development, consider where external hiring may be needed to fill critical capability gaps, particularly in system integration, MTD reporting, and automation.

Process: Simplify and Standardise
Complexity creates risk. Take time to review how your processes work across the tax cycle. Look for opportunities to simplify, remove duplication, and reduce manual inputs. Standardised workflows will make it easier to automate tasks and maintain accuracy as reporting requirements become more demanding.

Technology: Focus on Integration, Not Just Implementation
The goal isn’t to have the most advanced tax technology. It’s to have the right systems in place—and ensure they work well with your finance and reporting platforms. MTD compliance will require clean, connected data, which can only be achieved with joined-up systems. Focus on integration from the outset.

Leadership: Shift the Role of Tax Leaders
Digital tax transformation changes what is expected of tax leaders. They need to be visible across the business, guiding change, supporting strategy, and ensuring that tax considerations are embedded in broader transformation plans. They must also be able to speak the language of IT, finance, and operations, and manage cross-functional projects with confidence.

 

The Future of the Tax Function

As technology reshapes the way tax departments operate, the function itself is starting to look very different. Here’s what we expect to see more of in the years ahead:

  • Integrated digital tax platforms, with fewer manual touchpoints and stronger links to finance systems.
  • Tax teams that work in closer partnership with finance, IT, and data functions, sharing tools, processes, and insights.
  • A blend of compliance, analytical, and technology-focused roles, with growing emphasis on skills like automation, reporting, and data visualisation.
  • Ongoing investment in learning and development, particularly in areas like MTD compliance, AI, and system integration.

Digital tax transformation won’t be easy. But it is necessary. And the sooner you begin the process, the better positioned you’ll be to handle regulatory change and drive value from your tax teams.

 

What We’re Seeing in the Market

At Cedar, we’re working with tax leaders across a wide range of sectors who are rethinking the structure and focus of their teams. Several hiring trends have become clear.

Firstly, we are seeing rising demand for tax professionals who can lead digital implementations, particularly those familiar with MTD-compliant platforms and integrated finance systems.

Secondly, as businesses look to bring in external expertise to deliver digital tax transformation projects without the long-term commitment, interim hiring is becoming more common.

Finally, roles that focus on data such as tax Data Analysts and Reporting Leads are growing in both volume and importance.

Finding the right people is one of the hardest parts of any digital tax transformation. It’s not just about technical skill. It’s about attitude, adaptability, and the ability to work across traditional boundaries. At Cedar, our tax recruitment specialists understand this. We focus on:

  • Connecting you with professionals who combine deep technical expertise with modern, digital-first thinking.
  • Providing interim and permanent talent solutions that support transformation projects from start to finish.
  • Helping you assess your current capability and design a hiring plan that aligns with your wider objectives.

If you’re unsure where your biggest capability gaps lie, now is the time to talk to our team about how we can support your digital tax transformation and your tax function’s next phase of growth.

 

Get in touch with our tax specialists to find out how Cedar can help you build stronger, future-ready tax teams.