CCH Auto - Tax Innovation

5/24/2018 CCH Auto - Tax Innovation

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CCH Auto

Improving practice

efficiency through

tax innovation

Software


2/15CCH Auto: Improving practice efficiency through tax innovation1

Improving the tax process

Think of all the steps that you and your staff have to go through when preparing a clients tax return, from

receiving a bundle of unsorted papers or a bunch of emails to submitting an approved tax return.

These steps form a process and, like any process, there are opportunities to make it more efficient:

Data collectionHow can you encourage your clients to give you more, and better quality, information?

Could they use email? How about a secure area on your firms website?

Data entryIs it possible to reduce the amount of data entry your staff have to perform? Can information

be extracted from purely electronic sources, like PDFs and scanned documents?

Data reviewWhat steps do you take to check the information thats been entered, before asking your clients

to approve the return? What more could you do?

Data submissionHow often are returns rejected by HMRC because of incomplete or inconsistent data?

Can rejection rates be reduced?

CCH offers a range of tools to streamline and improve every aspect of the tax process. By making each step more efficient

and by eliminating the potential for errors, we help to make the entire process simpler, easier and faster. Your staff spend

less time dealing with mundane admin and more time doing the things that can really make a difference, to both your

clients and your own practice.

In this document well be concentrating on just one of these tools: CCH Auto, recently shortlisted for Best TechnologicalInnovation in the annual Taxation Magazine awards.



*Source: CCH estimate based on client interviews (May 2010)

What is CCH Auto?

For an average personal tax return, about 80% of the chargeable value is spent simply identifying and sorting source

documents, extracting information and manually typing it in.*

Until now this monotonous, low value work has been unavoidable. Its a process that hasnt fundamentally changed since

the first computerised tax systems for accountants were launched in the UK in the 1980s. Clients send in their papers so

that their accountant can sift through them, page by page, finding and highlighting relevant figures and typing these one

by one into their tax preparation software.

CCH Auto changes everything.Starting with either paper documents or electronic files, CCH Auto automates the entire process of collating documents,

creating a client file, identifying and extracting tax-related information and completing the tax return. It eliminates most

manual data entry and it simplifies the review process.

CCH Auto is clearly a major innovation in tax technology. In a sense, accountants didnt know they needed it because they

had no idea it was possible (and nor did we until we tried!). But once they have seen CCH Auto in action for themselves,

understood its potential and realised what it can do for their practice, their enthusiasm is genuine and obvious. As one of

our clients put it Tax returns, dare I say it, are fun to prepare now. Thats certainly an innovation!

Recognising the importance of CCH Auto and its impact on the way in which tax work is performed in the UK, in March

2012 the software was shortlisted for Best Technological Innovation in the prestigious annual Taxation Magazine awards.

The winner will be announced in May.

Click here to see the video interview



What makes CCH Auto

so innovative?When you look at a PDF of a P60 or a scanned share dividend voucher, its as if youre looking at a photograph of the

document. The file contains plenty of information, but it has no structure. When humans read these forms theyre able

to identify the figures that represent total pay or tax credit and it might be possible for them to copy and paste this

information somewhere else, but for computers its a different story, at least in the UK.

In the USA and Canada, most taxpayer information is printed onto standardised forms with a fixed layout, which makes

document recognition much easier. Because of this, in North America CCH has been able to develop Intelligent Document

Recognition technology to extract data from the key fields of a wide variety of forms.

What makes CCH Auto a unique innovation is that here in the UK we have developed a way to recognise forms andfields based on their content rather than their layout so that the software can deal with wide variations in form design.

For example, CCH Auto not only recognises a dividend voucher as a dividend voucher, it can also find the area of the

dividend voucher which contains information about the tax credit and extract this figure to use in the clients tax return.

And it does this without user intervention.

CCH Auto allows accounting practices to get all the benefits of outsourcing data entry without any of its downsides,

such as loss of control, security issues and concerns over quality.



Meeting accountants needs

The existence of the North American scanning and data extraction systems gave the CCH UK Development Team its

initial stimulus to investigate the feasibility of a similar system for the UK market.

Without standardised form layouts, they always knew it was going to be a tough challenge, so their first action was to

conduct market research to clarify accountants requirements and opinions.

When asked what factors would drive the adoption of paperless technologies, accountants identified the following as

their top four:

Freeing up fee earning staff

Working from a single electronic client file

Having an inclusive document management system

Automating data capture

Over 40% of respondents said that keyless data entry would either be very useful or essential to their practice. No surprise

perhaps when you consider that almost a third of those surveyed reported that specialist staff spent between 25% and

50% of their time on non-chargeable tasks.

Although they clearly understood that it would bring benefits, it has to be said that our survey respondents were quite

sceptical about whether keyless data entry would ever actually be possible. Fortunately, our Development Team is always

up for a challenge!

Ever since then we have worked closely with our clients and other tax and accounting professionals to develop CCH Auto.

Their suggestions and their continued enthusiasm for the software have been so important in the development process.



You can see CCH Auto in actionatwww.cch.co.uk/auto

What does CCH Auto do?

To understand what CCH Auto does, its helpful to break its operation down into four discrete functions. In practice,

of course, these four functions form an integrated workflow with no boundaries between them.

Referring back to the original CCH client survey, these four functions were designed to satisfy the top four requirements

of the respondents:

Freeing up fee earning staff

Working from a single electronic client file

Having an inclusive document management system

Automating data capture

As we will see, with CCH Auto the entire job of collating documents, identifying relevant data, reviewing the

information and posting this to the tax return can be completed quickly, securely and accurately and with minimal

manual intervention.

tax returnworkflow

reviewand process

organise andbookmark

extractand validate

captureand file



Step 1: capture and file

delivering automated document managementThe challenge: Tax staff need a simple way to capture and file tax source documents as theyre received from clients.

These come in a variety of formats, including softcopy.

The solution: For each client, CCH Auto provides a single point of access for all source documents. These can be added

to the integrated Document Centre by scanning the paper originals (using any scanner with a TWAIN or ISIS interface),

or from electronic files sent by the client (in TIF or PDF format).

The benefits: Adding source documents to the Document Centre is a simple process. Once its been done, tax staff no

longer have to refer back to pieces of paper or files scattered across the network everything they need can be accessed

directly from one location.

All the source documents for a single client

are stored together in the Document Centre



Step 2: organise and bookmark

creating a single electronic fileThe challenge: Its possible to assemble a single PDF file from scans and other sources and to order its pages manually

to achieve some degree of organisation. However, unless this process can be automated, it will require professional staff

to manually check and classify the information.

The solution: As well as storing an individual softcopy of each document, CCH Auto also creates a single client file in

PDF format. Using its innovative Data Dictionary the software automatically adds bookmarks to identify each document

and document category (Income, Deductions and Reliefs etc) a unique feature of the CCH software.

The benefits: No matter what order the original documents were in when they were added, each PDF is organised in

exactly the same way, without any intervention from fee earning professional staff. Having every client file in exactly thesame order makes them easier and quicker to review.

Source documents are analysed and

identified to create a bookmarked PDF in

exactly the same format for every client



Step 3: extract and validate

automating data captureThe challenge: If theyre working from a collection of paper documents or individual softcopy files, how can tax staff be

certain that theyve transferred information correctly and completely from source documents to the clients tax return?

The solution: The Data Dictionary in CCH Auto doesnt just recognise forms. It also recognises individual fields within

those forms and it knows how this information maps across to a personal tax return. The system checks the extracted

data to ensure that its valid for the tax return and then presents the source documents on screen together with the

information thats been extracted from them.

The benefits: With the original documents and the extracted figures presented side-by-side on-screen, review now

becomes a simple matter of checking one against the other. Figures can be edited and notes can be added to createa secure, paperless audit trail.

After validating the extracted information, its presented

alongside the original form for quick review



Step 4: review and process

freeing up fee earning staffThe challenge: Manual data entry is slow and open to error and it also requires professional staff to perform, or at

least to manage, the work. Until now there has been no other way to transfer information from source documents to

a computerised system.

The solution: Once the review has been completed and the extracted data has been checked, theres just one more thing

to do in order for CCH Auto to finish the job. Information is transferred to CCH Personal Tax with a single button click;

within seconds the clients tax return is updated.

The benefits: Fee earning staff spend less time on routine admin and data entry and more time on value added activities.

The entire process is quicker and transcription errors are eliminated.

The clients tax return is updated from the

information extracted by CCH Auto



Tax workflow with CCH Auto

Although its clear that CCH Auto can be used to improve the single process of preparing a tax return from source

documents, we believe that the software should be seen in the wider context of automating and simplifying the entire

practice workflow. To this end, the successful implementation of CCH Auto involves us working with firms so that the

software is fully embedded in their working practices.

Our vision is for systems in which electronic data capture, document management and task and workflow management

are tightly integrated. In these systems data is digitised as early as possible and electronic documents replace paper

wherever possible. Clients are encouraged to share information digitally, from the simple use of email to the sophistication

of a Client Portal.

Typical tax workflow using CCH Auto

PDF

tif

PDF documents submittedvia Client Portal or email

hardcopy documentsscanned by

clients or thepractice

1copy of individual tax source

documents stored in theDocument Centre

single bookmarked PDF foreach client with a consistentformat across all clients

2

3

PDF

CCH Auto identifies andcategorises each document

P60

4

the data in each documentis automatically identified

and highlighted

data is validated and displayedon screen

review notes are actioned

with a single click

information is transferreddirectly to the clients tax

return for approval and filing

5

HM Revenue

& Customs

initial on-screen

review

request for more

information

review notes

added to the PDF

extra documentsadded to the file as

they are received



The client perspective

PK GroupTechnology is a very important part of what drives this firm. Many of our client services depend on IT and were always

looking for ways to improve our efficiency and expand the services we offer. By making routine processes as efficient as

possible, you allow your professional staff to focus on earning fees rather than performing admin like data entry, so when

we heard about CCH Auto we were keen to try it.

The first major benefit comes simply from scanning tax source documents and getting them off your desk. Just having

a single PDF containing all the source documents in one place is a big improvement and the automatic bookmarking

is a great feature which we found worked very well. Once documents have been scanned, staff can access everything

together, without having to hunt around for papers. When a client phones, you can get hold of the information straight

away without leaving them hanging on the phone or having to call them back. It helps to project a professional image and

makes everyones life easier.

I hadnt thought much about the next stage the automatic transfer of data from the scanned documents into CCH

Personal Tax. To be honest, I didnt really see how this could work but it does! The software identifies the form from the

data that it contains, picks out the information that needs to be transferred and maps it across to the tax return.

We dont consider CCH Auto to be a direct replacement for professional staff because completing a tax return isnt just a

matter of transferring numbers from one place to another, it also involves thinking about what lies behind those numbers

and what that might mean to the client. However, CCH Auto is a great way to remove the drudgery from the process and

make it more efficient. Of course, the less time professional staff spend transferring numbers, the more time theyve got

for doing that all-important thinking.

Theres no doubt that CCH Auto can speed up the processing of tax returns, though its too early to quantify the time

savings. What we can say with certainty is that it simplifies the process. And that has to be a good thing.

Simon Coles

Partner

When a client

phones, you can get

hold of the information

straight away without

leaving them hanging on

the phone or having to

call them back.

CCH Auto is a great

way to remove the

drudgery from theprocess and make it

more efficient.



Understanding the challenges

At this point its worth looking in detail at some of the challenges that the CCH UK Development Team faced and how

they overcame them.

The challenge of different form layouts

Consider a relatively simple form like a P60. Although they all contain the same basic information, across the country

thousands of different layouts are used by payroll departments and commercial software vendors.

The challenge is to recognise the form based on the information it contains but without the need to find any of that

information in a fixed position on the page. And without the need for human intervention.

Our Development Team integrated a number of technologies to ensure that any P60, regardless of its layout, is recognised

as a P60. At the same time that it recognises the form, the software also identifies all the data on this form that can be

used to complete a tax return.

CCH Auto also allows the user to identify and extract additional information from the form if necessary. The software

saves any changes that are made for that form type so that, if it ever encounters the same form in the future, it can

perform a full data extraction.

The challenge of creating and editing PDF files

Every accounting practice will be familiar with Adobes Portable Document Format. Many commercial software packages

now produce PDF files and clients will often supply information downloaded in this format from their banks and other

sources.

Although the PDF reader is widespread and free, most practices have a limited number of licences for software that will

allow them to create and edit PDF files.

To overcome this, our Development Team built PDF writer functionality into CCH Auto. This allows the software to create

a bookmarked and indexed PDF, but it also allows that PDF to be edited, re-ordered and annotated, without the need for

additional licences for PDF writer software.



*Source: Client testimonials published on the CCH US website.

See, for example: CCH Auto tackles paperless tax returns.

Our journey to market success

May2011March2012

May2010

January

2010

The initial work on CCH Auto, including market research and client interviews, began in early 2010.

Even before they started, the CCH UK Development Team had high hopes for CCH Auto, based on the experiences

of US and Canadian accountants using the somewhat less sophisticated software available in these countries.

One Top 50 US firm, for example, measured an average saving of 22 minutes for every 25 pages of source

documentation and CCH clients in the US typically report savings of around 20 minutes per return.*

By May 2010 an early prototype of CCH Auto was available to demonstrate at the annual CCH Conference. We used

this to get ideas and feedback from our clients and to provoke thought and debate on the wider topic of workflow

automation. This is an area where we believe its possible for accounting practices to make substantial productivity gains.

After twelve months of development and refinement, Version 1.0 was launched at the annual CCH Conference in

May 2011. By this time CCH Auto could recognise 32 form types and it could extract and post data from 14 of these

to CCH Personal Tax. The software received a very positive reception from our clients and from members of the press

who saw it at our media launch.

Since then over 25 sales have been made and many other firms have expressed interest and seen demonstrations of the

software. The overwhelming response has been positive and when people see for themselves the automatic posting of

figures extracted from paper or softcopy originals, the single most common reaction is somewhere between amazement

and disbelief, as our case study demonstrates. CCH Auto is certainly creating a buzz!

Notwithstanding its early success, Version 1.0 was always seen as the starting point rather than an end in itself and

CCH Auto has undergone continual development since then, focusing on three areas:

Increasing the number of form types that are recognised

Enabling the software to recognise and learn new forms for itself

Optimising recognition rates for extracted data.

Throughout this process weve been driven by what our clients want and were very fortunate to have had their

full involvement.

Click here for details

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CCH is a trading name of Wolters Kluwer (UK) Limited. Registered in England and Wales, No 450650. Registered Office: 145 London Road, Kingston upon Thames KT2 6SR, UK.

Wolters Kluwer (UK) Ltd is authorised and regulated by the Financial Services Authority for general insurance business.

Want to know more?

For more information about CCH Auto

or any of the other CCH products

and services:

Call:

0844 561 8181Email: [email protected]: www.cch.co.uk/software

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CCH Auto - Tax Innovation