AI Transforms Tax Advisory at KPMG UK -

Artificial intelligence has revolutionized numerous industries, with the tax advisory sector being no exception. KPMG UK is a leader in the professional services industry. The company implemented artificial intelligence tools to streamline its tax advisory services. These tools also enhance operational efficiency and improve service delivery. This case study examines the use of artificial intelligence by KPMG UK. The firm partnered with Blue J, which specializes in predictive tax analytics.

The Challenge

KPMG UK, like many tax advisory firms, faced several challenges in its tax research and advisory services:

Time-consuming research: Tax professionals spent significant time manually reviewing regulations. They reviewed case law and tax precedents. This led to inefficiency in providing timely advice.
Inconsistent tax interpretation: The complexity and frequent changes in tax laws posed challenges. These challenges affect ensuring consistent, accurate interpretations of the law. This results in potential compliance risks for clients.
Resource allocation: Routine tax research took up much of the staff’s time. This limited their ability to focus on more complex, high-value advisory tasks.

Need for Innovation

To overcome these challenges, KPMG UK needed a solution to:

Automate and optimize tax research and analysis.
Improve the accuracy and consistency of tax advice.
Enable tax professionals to focus on more value-added tasks, such as strategic tax planning and client advisory services.

The Solution: Artificial Intelligence-Driven Tax Research with Blue J

In 2022, KPMG UK partnered with Blue J, a firm known for its expertise in predictive tax analytics. The goal was to integrate Blue J’s artificial intelligence-powered platform into KPMG’s tax advisory processes. This integration aimed to enhance efficiency. It also sought to deliver more accurate results.

Key Features of the Artificial Intelligence Solution

Predictive Analytics for Tax Outcomes
Blue J’s artificial intelligence platform uses machine learning to predict tax outcomes. It achieves over 90% accuracy by analyzing a vast database of tax legislation, case law, and precedents. This tool helps tax professionals identify the likely tax outcome for complex client situations.
Enhanced Efficiency
The artificial intelligence tool automates much of the tax research process. It reduces the time required to gather and analyze relevant information. Tasks that once took hours can now be completed in a matter of minutes, resulting in significant time savings.
Generative Artificial Intelligence for Instant Tax Guidance
The platform is powered by OpenAI’s language models. It provides tax professionals with real-time assistance. It generates tax advice based on specific queries. This tool helps professionals quickly access insights without having to search through lengthy databases.
Seamless Integration
The artificial intelligence system became part of KPMG’s Digital Tax Gateway. This integration simplified access to reliable insights for internal teams. Clients also benefit from data-driven insights at the point of need.

Implementation Process

KPMG UK’s adoption of artificial intelligence in its tax advisory services followed a structured and phased approach. The firm used this strategy to ensure smooth integration and adoption of the technology.

Phase 1: Pilot and Testing

Objective: Test the effectiveness and accuracy of Blue J’s artificial intelligence tools in real-world tax advisory scenarios.
Method: A select group of KPMG’s senior tax professionals used the artificial intelligence system on complex tax cases.
Outcome: During the pilot phase, the artificial intelligence system showed it could reduce tax research time by more than 50%. It produced accurate results much faster than traditional methods.

Phase 2: Full Integration

Objective: Scale the artificial intelligence solution across KPMG UK’s entire tax advisory division.
Method: The artificial intelligence tool was integrated into the daily workflow of tax professionals. Comprehensive training sessions were held. These sessions ensured team members were well-versed in using the system effectively.
Outcome: Artificial intelligence tools became a central part of KPMG UK’s tax advisory process. These tools increased the overall efficiency of the firm’s tax teams.

Phase 3: Continuous Optimization

Objective: Ensure the artificial intelligence system remains updated with changes in tax legislation and best practices.
Method: Developers regularly updated the artificial intelligence tool. This ensured it kept pace with new tax laws and client needs.
Outcome: The artificial intelligence system continued to deliver reliable results. It adapted to new information. It also remained current with regulatory changes.

Results and Impact

1. Efficiency Gains

Reduction in Research Time
The integration of artificial intelligence tools helped KPMG UK. They managed to reduce tax research time by up to 75%. Tasks that previously took hours were now completed much faster. This change freed up professionals to focus on higher-value advisory services.
Enhanced Productivity
The time savings resulted in increased productivity. Tax professionals were able to dedicate more time to strategic tax planning. They also focused on complex advisory tasks. This ultimately improved client outcomes.

2. Improved Accuracy and Consistency

Accurate Tax Predictions
The artificial intelligence tool provided accurate, data-driven predictions for tax outcomes. With a prediction accuracy rate of over 90%, KPMG UK was able to deliver more reliable advice to clients.
Consistent Tax Interpretation
The artificial intelligence platform helped ensure that tax laws were interpreted consistently. This reduced the risk of human error. It also improved overall compliance for KPMG’s clients.

3. Financial Results

Revenue Growth
In 2024, KPMG UK reported a revenue of £2.99 billion, reflecting a modest 1% increase from the previous year. The firm invested in artificial intelligence and technology-driven tax solutions.This investment contributed to its ability to maintain strong revenue performance amid a competitive market.
Profit Growth
KPMG UK’s profit before tax grew by 11%. It reached £404 million. This demonstrates the positive impact of the artificial intelligence-driven transformation on the firm’s profitability.
Increased Partner Payouts
Average partner payouts rose by 9% to £816,000. This increase is a direct result of improved operational efficiency. The profitability was brought about by the artificial intelligence system.

Future Outlook

Looking ahead, KPMG UK plans to continue expanding the use of artificial intelligence across its tax advisory services. The firm aims to:

Enhance Real-Time Compliance Monitoring
KPMG plans to leverage artificial intelligence for real-time monitoring of clients’ tax positions. This ensures compliance with evolving tax laws. It also helps identify potential risks before they materialize.
Scenario Forecasting
The firm intends to use artificial intelligence tools for scenario forecasting. This will enable clients to see the likely tax implications of various decisions. It will also help them make more informed choices.
Improved Client Interaction
KPMG UK aims to enhance its client interactions further. They plan to use generative artificial intelligence for more efficient responses. This will provide data-driven answers to client queries.

Conclusion

KPMG UK has adopted artificial intelligence technology through its partnership with Blue J. This adoption has delivered measurable improvements in the firm’s tax advisory services. The integration of predictive analytics and generative artificial intelligence has streamlined research processes. It has enhanced the accuracy of tax advice. This integration has improved overall productivity. KPMG UK is equipped with artificial intelligence tools. It is in an excellent position to provide more efficient tax services. These services offer value to the firm and its clients.

KPMG continues to innovate and expand its use of artificial intelligence. The firm is setting new benchmarks for excellence in tax advisory and professional services.

AI Transforms Tax Advisory at KPMG UK