In-House tax execs moving back to Big Four......

By Simon Godley

In my last two blog postings on people moves, I have highlighted senior tax executives (either Head of Tax or senior divisional tax manager) that have been attracted back into the profession into Big Four firms at senior levels.

Clearly the Big Four are tempted to bring into their tax service lines senior industry tax execs, I guess because they have very valuable insight (ie from the 'users' perspective) of a particular industry. Notable moves have been from financial services / insurance groups into a Big Four's FS tax practice in London. Also, the tax service line is bringing in a well known figure in that industry, someone who will have a valuable network and possible in-roads into existing and new clients.

However, I have also picked up that there are risks for the practice in opting for this type of hire. A senior Head of Tax will be looking to join the practice at Tax Partner level to offer them the financial incentive for the move. A Head of Tax of a very large corporate group could be earning a package of £200 - £350k including bonus, and so will need to join as an equity partner. This salary level is above what could be offered at Director level. This could lead to two areas of concern for the practice. Firstly, this new Tax Partner is under pressure to bring in the revenue stream proportional to their salary level, and to demonstrate that they can convert their industry contacts into fees, which I suspect is not easy. Secondly, and more of an immediate issue, is what impact this appointment may have internally to those at Director level in the practice who are trying to carve out a progression to a Partner role. In a very buoyant and growing economic backdrop, these two issues may become less significant, but in more tense and uncertain times?

For the above reasons, I think this is why the vast majority of Tax Partner appointments are home grown, but clearly sometimes the Big Four like to take more of a risk to raise their profile in a particular sector.

Deloitte adds more in-house tax expertise to FS practice

Source: International Tax Review

Deloitte has appointed Ellie Patsalos, a vice-chairperson of the UK firm, as its new global head of tax for the financial services industry. The firm has also hired Irene Salvi, the head of tax for Swiss Re, to lead its Swiss financial services tax practice.

Paradigm hires new Tax VP

Source: taxcareers magazine

Paradigm, a software supplier to the global oil and natural gas exploration and production industry, has appointed Eileen Howell to its executive management team as vice-president of tax. In this role, she will manage and develop tax strategies across the world, including the examination and strategic planning of Paradigm's entity structures, staffing levels and branch operations.

Howell has more than 20 years' global accounting in the energy industry. She joins Paradigm from Schlumberger, a global oil field services company, where was oil field services US tax manager. At Schlumberger, she managed all US tax matters for the company's oil field sector and held several managerial positions in its divisions and joint ventures, including worldwide tax manager of both WesternGeco (a JV between Schlumberger and Baker Hughes) and Schlumberger Network Solutions.

Howell also worked for four years in Singapore as Schlumberger's accounting manager responsible for the Pan Pacific basin.

E&Y bags Thames Water's tax head

Source: taxcareers magazine

The former head of tax at Thames Water has joined Ernst & Young's Manchester operation - Helen Reid enlists as a senior manager.

Reid was recruited from Thames Water following four years of her career spent in the water sector. In her new role, Reid will be responsible for providing corporate tax advisory services to north-west quoted companies and large privately-owned businesses.

Her appointment is also part of Ernst & Young's ongoing investment in its UK utilities practice, and she will continue to be involved in the water industry through the firm's water network. Commenting on the appointment, Manchester head of tax Tracy Wood said: 'Helen Reid's specialist expertise in the tax advisory field will bring extra value to our clients across the gamut of industry sectors here in the North West.

'In addition, she is one of the UK's senior water specialists and will bring significant capability to the firm's fast-growing utilities water team, contributing to our UK credentials and helping us to increase our presence in the water sector.'

A graduate of Oxford University, Reid was born and raised in Burnley and lives in Manchester - she recently relocated to the North West from Reading.

Microsoft will find small business software market tough

Source: Kevin Reed, Accountancy Age

Microsoft has been warned that it faces an uphill struggle in gaining ground in the small business software market if it does not focus on customer services, a rival warned today.

Following Microsoft's launch of Office Accounting in the UK yesterday, rival software provider MYOB said that while the move would expand the market as penetration was not high, the US software giantwould have to focus on customer service to displace existing customer bases.

'Small business owners want a partner that will support them and help them to grow their business, not just sell them software,' said Wayne Schmidt, managing director at MYOB.

'My experience is you need to be offering a complete support and service solution, not simply product. Having a deep relationship with accounting practices is also critical to the success.'

As part of its offering following the long awaited launch, Microsoft will launch a UK accountants' network and has taken an aggressive stance on its pricing; offering the product for free in certain circumstances.


SG comment: Given previous track record at launching their own products into established markets, I suspect Microsoft will make this work. Maybe at some point you be able to buy/download Microsoft tax software? That could be a bit too niche, even for Microsoft.

GM announces tax charge

Source: Penny Sukhraj, Accountancy Age

General Motors has announced a $39bn charge in its third quarter results to remove net deferred tax assets from its books.

The Detroit-based company said that the charge, which affects the automaker's businesses in the US, Germany and Canada, would not impact operations or restructuring.

The hit on the books is the largest at GM so far, which has encountered a string of accounting irregularities since 2005.

GM's third quarter results, which are set to be reported today, are likely to show significant red ink, the New York Times reported.

Tax skills shortage - what can be done?

Thoughts of the day - Simon Godley

I keep seeing examples of very well known, high profile and blue chip UK companies (or international companies in the UK) really struggling to recruit UK and/or international tax professionals. It can now take 6 months or more from inception of a role to having a candidate accept an offer. Then in most cases they will serve a 3 month notice period, and so it can take 9-12 months (or longer) to have a tax professional start in a specific role which has been vacant. When a Head of Tax is advised that this could be the timescale to recruit, they will seem highly concerned - in a 12 month period, the outlook or landscape of a business could have completely changed.

As I have discussed in previous articles, this is due to a combination of an acute shortage of fully trained tax professionals in the UK, coupled with a lack of appetite from tax professionals in the UK to move jobs. That's the candidate effect, but there is also the client effect ie when it comes to considering candidates from different backgrounds for a role, just how flexible will a company be? In my experience, not very, which can be fair enough, because in-house tax functions want to recruit in experience which is very targeted for a particular role, thereby not needing to spend time training them after they have joined.

But I think the UK market, and particularly companies, are possibly missing something here. When I look through my candidate database, I have a sizable number of qualified and potentially highly skilled tax candidates from overseas - popular places of origin are India, Australia, South Africa, and Eastern Europe. These candidates are not usually included for first interview because they either lack or have no UK tax experience. But if they were included for first interview, and they held a highly skilled migrant visa to work in the UK (which quite a lot do), and there wasn't a major language barrier (and there rarely is), and the company was prepared to allow them some time to retrain into the UK tax system, then companies may have someone up-to-speed and trained in a role quicker than if they hold out for a UK tax candidate.

The employer will also benefit from the salary that they will have to offer ie lower than an equivalent UK tax professional, and at the same time an attractive salary level from the candidate's perspective.

I'm not at all saying that recruiting candidates from overseas is not without some major pitfalls, for example, physically relocating the person and their family. But I feel that there is more scope for UK/international candidate arbitration than is currently practised.

Views on this warmly welcome.

Government caving in over CGT proposals

Source: Accountancy Age

Prime minister Gordon Brown and chancellor Alistair Darling are reportedly about to bow to fierce opposition from employer groups against proposed changes of the capital gains tax (CGT) with an offer to revive retirement tax relief for small business owners, possibly for amounts up to ₤100,000.

The turnaround comes one day after the chancellor met with the heads of yet another employer group, EEF, representing engineering manufacturers, who argued the proposed changes to the CGT would be damaging for enterprises by rewarding investment in non-business assets and sent ‘a negative signal at a time when the investment climate, especially for small firms, is set to become more difficult’.

Business owners, who are about to retire and who would be particularly hard hit by the proposed CGT changes, are likely to receive a tax exemption, possibly on the first £100,000 they make, from the sale of their business.

The Treasury is said to still be working out the level, but government sources have told The Daily Telegraph the threshold would run into ‘tens of thousands’ and could be close to a £100,000 limit. Under the old retirement relief fund, which was phased out when new CGT levels were introduced by Labour in 1998, the first £250,000 of a capital gain was tax free, but anything after that was taxed at 40%.


SG comment: I am sensing this whole thing has been such a bad start for Darling as Chancellor, with such a major revolt from UK business. I am wondering how much opinion he actually surveyed from small/medium sized business before these proposals, or perhaps he can't do that, which would be strange? I am also very comforted that UK business can have a major influence on government decisions, which is a relief.