EY automates VAT process with Power Platform, reduces tax errors and increases value to customers

The value of good data

“All returns start with data. You are nothing without good data,” says Hermans. “A business is only as strong as the quality of what it reports in its returns because there are risks associated with bad data and incorrect reporting.” 

EY teams validate the source data provided by clients, calculate the VAT due, and transform the data into returns. Historically, the EY business team was managing tax translations using a Microsoft Excel-based application. The clients provided data and EY manually generated reports and dashboards. Bad data triggered manual adjustments. The organization wanted to move from Excel to a web-based application. It found the right time to start in 2017, as clients were requesting deeper data insights, analytics, and data visualizations.

“We were missing an automation piece in our standard process. We needed a data tool we could scale and adopt broadly; one we could use to modify data and run background assessments to assist EY teams in their work,” says Hermans. 

The journey to increased automation

There were two automation opportunities with the legacy solution. 

First, the business team had to redo business analytics manually across all clients. Second, EY technology teams had to historically build custom environments for each of their legacy VAT deployments. All this became untenable when EY needed to modernize and deploy the solution across hundreds of VAT clients almost overnight to meet the growth of the business. 

“We had at least 80 percent of the work duplicated per client. This created a huge challenge in terms of deployment time and activity cost,” says Wasim Tambe, Senior Technical Product Manager, EY Technology. 

EY teams turned to the technology team at Microsoft. “We wanted to build an automated SaaS web application so EY tax professionals could spend their time advising clients on improving their VAT portfolios, as opposed to running manual business analytics and generating reports,” says Ken Priyadarshi, Global Chief Architect, EY Technology. 

EY teams consulted with Microsoft to develop a web application using Power Platform, a data-mesh inspired back end using Azure Databricks, and a developer-operations or DevOps automation solution called Cloud Native Application Bundle (CNAB) that would automate and bundle elements into a single application. Read the companion story (EY teams turn to Microsoft for deployment automation solution that speeds up processes, saves money) to learn more about the CNAB solution. 

The elements combined to not only modernize the legacy solution to meet new business requirements, but also unlocked the path to next-generation technology reusability. 

Adding reusability to the solution 

Reusability is one of the most important strategic initiatives for EY technology today. EY re-architected solution for VAT not only modernizes the legacy VAT application to meet big data processing needs; it leverages best practices from Microsoft on data-mesh topologies that can be used repeatedly on future applications.  

One key way to do this was using container bundling technology. EY teams collaborated with Microsoft to use CNAB; this allowed EY teams to package the entire application into a container bundle that when clicked—like an executable—spins the infrastructure on the cloud for the user. The more EY teams reuse container bundles, the more their margin as a firm improves because they’re simply reusing a data architectural pattern for similar applications and similar data usage patterns instead of rebuilding technology infrastructure or new applications from scratch. 

“If you look at most EY client applications,” says Priyadarshi, “there is a common data journey on the back end—a reusable architectural pattern that can be reused across all our businesses. Using CNAB, we could technically use the VAT back-end infrastructure pattern on other applications at the push of a button, even if they have nothing to do with Tax. This will unlock the next wave of reuse benefits for EY teams.” 

Deploying the solution and its capabilities

EY teams kicked off production in January 2021 and deployed their enterprise-grade VAT Web Application six months later. The solution is now in production across the globe on multiple accounts and client engagements. 

“We modernized a legacy Excel and SQL-based application into a Microsoft Power Apps and Azure Databricks solution on the Azure cloud inspired by data mesh and data lakehouse architectures.” says Tambe. “The enterprise-grade solution is maintainable and scalable.” 

The web application incorporates more automation, which eliminates the possibility of human error, while adding flexibility and visibility. Not having to manipulate individual data files streamlines the process of VAT return preparation, review, and submission. 

“Once we automated the VAT data mesh, we could publish reports, visualizations, and insights on the web application to show the client. This frees up our engagement team to spend time on higher-value activity, thereby improving our internal efficiency while also increasing our business value to EY clients,” says Priyadarshi. 

It supports multinationals with an overview across all positions to examine trends, detect data quality issues, and pinpoint emerging concerns. EY teams can then make business decisions, conduct planning, and address and improve data quality. 

“What's key about the VAT Web Application is that it's presenting indirect tax data at both local and global levels,” says Hermans. “With a manual process, corporations can miss out on that central visibility and the benefits of a global overview perspective.” 

What’s next in EY data-transformation journey?

Since deployment, EY teams have been making continuous updates to the new technology based on client feedback and are now targeting thousands of engagements on their deployment roadmap. The organization is also at work on embedding serverless machine learning algorithms in future versions of the VAT Web Application.  

“We think of the application as a living, breathing entity. Even though it's live today, we haven't stopped improving it. That's the nature of a SaaS application—it's not a strict piece of software that you publish and it's done. It’ll keep growing organically and perpetually as part of the global technology platform because it's vital to our business,” says Priyadarshi. 

Besides continuous improvements, EY teams continue watching the ever-changing legislative environment and how the VAT Web Application can link into other types of reporting. “Particularly that line-by-line, nearly live digital reporting of transactions, because that's what we expect for future requirements,” says Hermans. “We’ll want to see how the solutions can fit and meet that need.”