How government staff in
Sweden cope with the new Value Added Tax system - VAT
This story appeared in more detail in EXPERT SYSTEMS magazine.
For many people, the thought of completing a Value Added
Tax return for HM Customs & Excise is likely to be only marginally
less intimidating than The Times crossword. Nonetheless, the UK
VAT law, as contained in the Value Added Tax Act 1983 (and amended
by various subsequent finance acts) is now an accepted and necessary
part of business life. But, however confusing and time-consuming
UK VAT laws may be, they pale in comparison with Swedish VAT (or
"MOMS" as the equivalent Swedish acronym works out) legislation.
Rules governing the payment of Swedish VAT are influenced by a
number of factors, including profession, business turnover and a
variety of exceptions. Currently, VAT is applied at three rates
- 25% being the ordinary rate, 21% for food and a tourist rate of
12%. The tax is collected by Swedish local authorities - "Kommuns"
- and embraces the full range of Social, Education and Health services
that they provide. Coping with the challenge of providing accurate
and up-to-date information about VAT legislation for the local business
community has presented Swedish Kommuns with something of a headache.
However, it is a problem that is being addressed with the help of
expert systems. Swedish firm Dialog AB, based in Ronneby, has developed
a VAT advisor system that is presently being used at over thirty
kommuns around the country.
Dialog is one of Sweden's largest IT businesses, employing over
2000 staff. Leif Lindell heads up the section responsible for developing
the VAT system. He readily acknowledges that the starting point
of the project was pure serendipity from one of the Company's directors,
who just happened to be an expert of VAT legislation and who recognised
the potential value of expert systems technology: "It was a
snapshot idea from someone who had the right experience. I had no
detailed knowledge of VAT and one of our first steps was to meet
with experts within the Federal Government."
Development of the system began in 1990 and Leif Lindell describes
the process of analysing the problem area in order to create a decision
structure that could be transferred into a computer.
"We used 'Post-It' notes to capture the elements, which were
then clustered into 'task' groups. For example, information about
VAT ruling influencing medical insurance had to be separated into
those matters affected by professional status, turnover, or exceptions
to the rules. Tasks were reduced into a series of sub-tasks which
ultimately terminated in a decision to a hypothetical question."
The technology used by Dialog is XpertRule®; a portable software
product for building expert systems developed by UK firm XpertRule Software
in Lancashire. XpertRule combines knowledge acquisition features
with an ability to represent knowledge graphically. It is possible
to express decision-making logic as a set of decision examples and
as a decision tree - the process used by Dialog to express the decision-making
process required to answer questions about Swedish VAT legislation.
Leif Lindell has worked closely with XpertRule distributor and expert
systems specialist NovaCast, a Swedish company that is not only
also based in Ronneby, but with uses the same office complex which
houses some 50 other high technology businesses in this town in
the South of the Country.
The close proximity of NovaCast has helped during the development
of 'MomsExperten' as the package is now called. Although XpertRule
allows the graphical representation of decision paths built within
the system, users are presented with a simple-to-use series of screens,
starting with a main menu and leading the user through a sequence
of questions, ultimately leading to the answer to any particular
query. Apart from holding discussions with VAT experts, Leif Lindell
has used XpertRule's rule induction facilities to ensure that the
most important questions are asked first and that the decision tree
follows a logical sequence. The addition of a "Windows"
based version of XpertRule has further enhanced the system's Graphical
User Interface: "The initial system contained 135 decision
trees and 350 attributes," Leif Lindell explains. "Although
a simplified system has been developed for kommuns since the advent
of the Windows version of XpertRule, the system still uses very
large decision trees. Graphical overviews are extremely helpful,
making it easier to 'cut' and 'paste' changes. While we looked at
a number of other products, including shell systems, this is a feature
that we did not find anywhere else."
Leif Lindell explains that there are very commercial motivations
for Swedish local authorities to invest in expert systems: "Mis-application
of rules governing VAT could result in substantial losses of revenue."
He describes how the system also helps to introduce efficiencies
in the way that the VAT offices are run and deal with inquiries:
"New staff use the system to provide answers. However, the
system also trains staff in the way they should think as they deal
with questions about VAT rulings."
Leif Lindell emphasises that, although it might be assumed that
staff would be cautious about expertise being 'imported', the expert
system is not perceived as a threat. "It works with low-level
rules and acts as a help system - supporting the learning process
for new staff and confirming knowledge for others. The system provides
a means of education and, after an initial period, staff mostly
manage without need to use the system." He adds: "Using
an expert system to enable relatively untrained staff to deal with
business queries also has the advantage of leaving experienced staff
to deal with complex issues. It is not a system that can be used
in every situation. There is a limit to its ability."
Regular changes to VAT legislation are accommodated within the
system. Dialog updates its MomsExperten product twice a year on
average, depending on the number of legislative changes. Leif Lindell
also maintains close links with contacts in the Federal Government
in order to remain in touch with changing rules and to ensure prompt
implementation of new versions of the software. XpertRule's ability
to provide a graphical overview of the decision rules has helped
with the process of update and change.
Although Dialog now deals with a wide range of organizations,
the Company has traditionally focused on supplying systems to local
and central government. Leif Lindell believes that there are many
opportunities for expert systems to play a part within local authorities:
"Payroll systems, for example, involve large amounts of money,
complicated and changing sets of rules and no acceptable scope for
error." The Company is continuing to explore areas of opportunity
in the use of expert technologies, working in partnership with NovaCast.
Rudolf Sillén, Managing Director at NovaCast, also sees
considerable scope for the development of expert systems, suggesting
that strategic knowledge will increasingly be used to drive successful
companies - benefiting from 'Knowledge Centres' built up by business
experts (and simply assisted by IT professionals). He acknowledges
that there continues to be sensitivity about the implementation
of expert systems, with its connotation of the replacement of human
expertise. However: "These systems provide more than just knowledge",
he suggests. "Their inclusion of silent knowledge means that
they should be more accurately referred to as Competence Systems."
Training with expert systems can help to bring staff up to speed
by following logical algorithms - subsequently delivering competence
that can then be used to augment the capacity of an organization's
Competence System.
The success of MomsExperten in supporting the activities of Swedish
VAT offices may not stretch expert systems technology to its limits.
Indeed, Leif Lindell points out that the system tends to be used
to deal with the large volume of simple questions and the training
of new, inexperienced staff - helping to enhance the knowledge of
staff and reduce the dependence on any form of artificial knowledge.
It seems inevitable that, as the price of experienced staff escalates
and the need for efficiency increases, so will the demand for systems
capable of capitalising on organizations' pools of knowledge and
expertise.
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