IT-tax divide raises UK compliance risk, Vertex says

UK businesses face rising compliance risk and weaker returns on tax technology spending because IT and tax teams remain poorly aligned, according to new research from Vertex.

The study found that 30% of UK organisations reported higher compliance risk linked to weak collaboration between the two functions. Another 26% said misalignment had led to wasted spending or poor returns on tax technology projects, while 36% said it had reduced agility or slowed decision-making.

The findings come as tax becomes more dependent on integrated systems, data flows and real-time reporting. With the UK moving towards mandatory e-invoicing by 2029, companies are under growing pressure to align tax requirements more closely with core technology planning.

One in four organisations surveyed said IT does not fully understand the tax function's technology needs. At the same time, 90% expected IT, finance and tax teams to work more closely together by 2026, yet only 27% had formal cross-functional teams in place.

Growing Strain

The research suggests the problem is becoming increasingly operational, not just organisational. Tax functions are handling larger volumes of transactional data and tighter reporting rules, while businesses are also updating finance and ERP systems, automating workflows and managing compliance across multiple jurisdictions.

That combination has made tax one of the most technology-dependent parts of the business. When tax teams are brought into system design too late, or IT teams lack a full understanding of regulatory requirements, companies can end up with tools that do not meet compliance needs or require costly rework.

None of the professionals surveyed believed current ways of working were sufficient. When asked what would improve collaboration, not a single respondent said nothing needed to change.

Censuswide carried out the survey among 250 finance directors and IT directors at companies with revenue of more than USD $100 million.

Compliance Pressure

The timing is significant as governments steadily increase digital tax reporting requirements. E-invoicing rules, real-time reporting and more detailed audit trails are pushing companies to treat tax data with the same urgency as financial reporting and cybersecurity controls.

For many organisations, that means tax can no longer remain a specialist function operating separately from enterprise systems decisions. Tax requirements need to be built into procurement, architecture, data governance and change management from the outset.

When that does not happen, the consequences can extend beyond project delays. Companies may face reporting errors, gaps in documentation or systems that cannot adapt quickly to new mandates. The finding that 30% of businesses already see increased compliance risk suggests the issue is no longer theoretical.

There are also cost implications. A quarter of respondents said IT does not fully understand what the tax function needs from technology, while 26% reported poor returns or wasted spending. That suggests some businesses are investing in software or implementation work before agreeing how tax, finance and IT should share responsibility.

"When organisations report increased compliance risk and wasted technology spend, it's a structural issue. Businesses that bring IT and Tax together early, with shared accountability, are far better positioned to manage regulatory change and unlock value from automation. Without early alignment between IT and Tax, organisations risk turning digital transformation initiatives into compliance challenges and underperforming technology investments," said Sal Visca, Chief Technology Officer, Vertex.

Structural Gap

The data points to a broader challenge in large organisations, where tax often sits within finance but depends heavily on systems managed elsewhere. That can leave tax teams reliant on IT resources prioritised around wider transformation programmes, cyber projects or operational upgrades.

As compliance rules become more digitised, businesses may need to revisit that structure. Formal cross-functional teams remain relatively uncommon, despite broad agreement that closer collaboration is needed. That gap between expectation and execution may become harder to sustain as reporting obligations expand.

For finance and technology leaders, the findings suggest tax technology decisions are becoming less about software selection alone and more about governance, accountability and system design. In practice, that could mean involving tax specialists earlier in enterprise change programmes and giving IT teams clearer visibility into regulatory requirements.

With mandatory e-invoicing on the horizon and real-time reporting spreading across markets, businesses are likely to face growing pressure to close the gap between IT and tax before compliance demands become harder and more expensive to manage.