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About In House Tax

About In House Tax

This weblog is a news and views site for tax professionals within the UK and international in-house tax community.  You will find information about appointments and people moves in and around the in-house tax market, issues affecting the in-house tax professional, opinions on the state of the tax job market, updates on tax technology, and other general thoughts of the day.

Hope you find it useful.

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Location: St Albans, United Kingdom

This site has been developed by Simon Godley, who also runs the niche tax recruitment company Talentpool Selection . Simon spends a lot of his time placing tax specialists into FTSE companies, large in-bound groups and some professional services organisations. He also recruits and is well networked around the UK tax technology and VAT markets.

Tax News

Financial Meltdown? Yes, but what about tax jobs?

Tuesday, 23 September 2008

By Simon Godley

Since Sept 2007, I have blogged a few times on this subject (see Credit Crunch - Impact on Tax Jobs and State of the tax job market?...and let's be honest!). I have previously painted a rather bleak picture for the market outlook over the next few years, and now it is clear that that partly painted picture has become reality, with the 15th, 16th or 17th Sept 2008 now lodged firmly into the history books forever as the black Monday (or Tuesday or Wednesday) when the credit bubble finally burst and showed its real venom.

Also this afternoon, I have sat and listened to Gordon Brown deliver his labour party conference speech - facing up to today's dire state of financial markets, but at the same time telling us how strong the UK economy is, and how well labour have done to 'create' 3m new jobs since 1997.

I do have some respect for Gordon Brown - as he said in his speech today, he is a serious politician needing to deal with some serious problems, and I think he will probably try to do all he can to rescue the country from financial doom. But he lost quite a lot of my respect when he supposedly claimed a few years ago that the UK has moved on from a boom and bust economy. This was an amazingly silly statement from a UK chancellor, given that ever since Columbus discovered America in 1492 has there been several speculative bubbles (coupled with a large credit situation) and they have without exception always burst. And this is a phenomena that will never stop happening. It is clearly part of human nature to get excited and greedy about something (eg a new discovery or technological innovation) and as a result value a market at a price now that will not be actually be seen for many many years to come. When we realise this, its too late, and the bubble inevitably bursts. This time round, it seems to be property and commodities, coupled with a vast amount of balance sheet trickery by the investment banks. We clearly learnt nothing from Enron!

But what about jobs? Well here we will see a knock on boom / bust. Gordon Brown's 3m jobs that the Labour party has created will undoubtedly be followed by a dramatic rise in unemployment from 1m to possibly up to 3m in the UK, thereby cancelling out the good work.

And what about tax jobs? Well, at the moment this seems a little harder to work out. Partly because the Big 4 firms, the largest employers of tax people, have not yet properly shown their hands as to their position on staffing levels. I think over the last year they have lost people through natural attrition (which might be, say 5%, for example) and they are generally not replacing these people. They have not yet made any announcements on redundancies - some are saying that they are not recruiting, whilst others are saying they are still recruiting (when they are presented with a very good candidate).

So what will happen? My prediction is that the Big 4 will make redundancies, and it will affect the tax teams. This will be particularly acute in tax teams that thrive on M&A work (specifically acquisitions) or structured products. I think there will be a few rounds of redundancies, possibly the first one will be in Q1 of 2009, possibly earlier. I think waves of redundancies may continue into 2010. On the in-house side of the market, I think there will be many job losses amongst the middle and front office tax teams from the banks. Within broader commerce/industry, there will probably be a good level of corporate consolidation, and in-house tax roles may suffer where there is overlap of job functions. Aside from that, I don't think in-house tax teams will be reduced much, unless they are forced to reduce in numbers because of broader cuts that are taking place in head office functions.

So the next few years will be very difficult for a lot of tax professionals, in that the tax job market simply can't be immune from what will be a depressed employment market. But how long will it continue? I have now revised my forecast from my blog article in June this year and I think confidence to generally start recruiting again will be in 2011-2012.

Gosh, I feel like a major doomster. On the slightly brighter side, I think the tax job market may benefit in 2 ways. People who concentrate on tax compliance and reporting will continue to be in demand. Also, the government are bound to raise taxes, and they will possibly do it through more corporate or indirect taxes, so there will remain the desire to have tax consultants (in practice) and/or in-house tax people looking at ways to reduce those increasing tax burdens.

That's my prediction, most of which is gut feel rather than any concrete evidence, but only time will tell the full story.

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posted by Simon Godley


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