2010: Tax employment market, so far

By Simon Godley

Coming into this year, I was quietly optimistic - I had a sense there was going to be more activity in the market, particularly compared to the deathly market of 2009. However, the market now seems broadly the same as the majority of last year. That said, I am writing this during half-term, and I think a lot of the market could be taking a deserved break with their children, hence not many calls being returned.

I have recently made the following observations:

* The interim tax / contract market is not good at all. Most contractors who have come to the end of a contract from late 2008 onwards to date have found it enormously difficult to find a new contract.

* The permanent market is very slow. It feels that the permanent market is slightly better than the interim market. However roles are generally appearing if a key member of the team is leaving, and the hiring manager can get the approval to replace, which in some cases is denied. Or if, by bringing a tax person in-house, will lead to a net cost reduction.

* Recruitment tends to be slightly more buoyant in very specialist areas of the market e.g. VAT / transfer pricing.

I guess generally the message is that the market is prepared to recruit for replacement for key people, but not yet at the stage of recruiting for growth. That could still be some time away.

Having said all that, the market does still 'feel' better than 2009, but not yet mended.

Talentpool - Poll on why people resign

Talentpool is currently collecting data on why tax people resign from their job and move on from their employer, trying to get some real-time data as to what motivates people to leave a company or a job role.

To participate and contribute in this, please click through to the Poll set up on LinkedIn.

Thanks in advance.
Simon Godley

KPMG makes further cuts in UK tax practice

Source: AccountancyAge.com

KPMG plans to cut jobs in its UK tax department in response to the recession and a slump in demand for merger and acquisition-related tax advice.

The UK’s third biggest accounting firm emailed UK staff today to tell them that it needs to cut jobs in its tax and people services department in the UK.

In an email to staff Richard Bennison, chief operating officer at KPMG, told staff it needed to cut the jobs in response to a changing market for tax services.

An industry source said that a couple of hundred jobs could be cut. A spokesman for KPMG confirmed that the firm planned to cut jobs in its UK tax practice, but declined to give a likely figure for job cuts. He said that it was still consulting staff.

Earlier this year, KPMG offered UK staff the chance to do a four-day working week, or take extended unpaid leave, in an effort to avoid redundancies if the economy deteriorated further.

The accountancy profession has been hit by a wave of redundancies over the past year. Firms including Deloitte, Grant Thornton and PKF have announced plans to cut hundreds of jobs in expectation of slower revenue growth this year.

Thousands of redundancies in financial services have cut the amount of advisory work on offer, while merger and acquisition activity has also slowed dramatically.

SG Comment: This appears to be the next phase, effectively 2nd round of heavy cost cutting, from one of the Big 4 firm's tax function. Although in the case of KPMG, their clever tactic was to lose cost and not people in their first round of cuts, by putting people into 4 days per week contracts. From my initial warning note Credit Crunch - Impact on Tax Jobs in Sept 2007, we have now seen a few waves of job cuts in the tax market, the first round with the Big 4 taking place in December 2008. There have been whole teams of tax structuring people (not in-house tax) cut from some of the investment banks, and in-house tax teams across industry / commerce have generally had to make some reductions, although quite small, on average shaving c.5-10% of staff from a tax team. This is a generalism as I think a lot of in-house tax teams have remained the same size, as I predicted back in September 2007. My estimation is that we are now approx 12-15 months away from companies being able to recruit more freely for growth, although I suspect it could take longer as I think that these 'green shoots' that I keep hearing about could be quite classic false dawn.

Tax Technology Forum - 29th April 2009 at the IoD - Review

The first Tax Technology Forum, hosted by Talentpool Selection, was held at the Institute of Directors on Wednesday evening this week.

Following initial welcome drinks and opportunity for networking / reacquainting with ex-colleagues, the event got straight into the discussion on current issues and challenges faced in tax technology, and what we could expect in the future.

There was a panel of six experts, highly experienced in the field of tax technology and accounting systems, answering questions and queries from a room of 35 tax and/or tax technology professionals.

The panel was:

Andrew Wrentmore – ONESource Tax Provision, Thomson Reuters

Alan James – European Director, Vertex Global Tax Solutions

Graham Tilbury – Independent Tax Technology Consultant

Michael Camburn – Managing Director, Ryan & Company

Ilana Rinkoff – Director of Tax Risk Management Network

Gareth Scanlon – EMEIA Tax Performance Advisory Group, Ernst & Young


Questions raised included:

• My organisation is about to embark on a major finance transformation. We are looking to implement a standardised ERP system with a view to achieving tax automation. What have other companies done on this? We are looking for creative / visionary ideas which are currently being employed in the market.

• Under proposals introduced in the Budget, the Senior Accounting Officer will now be personally accountable for certifying that they have adequate accounting systems in place to ensure the accuracy of their tax computations or face penalties of up to £5,000 plus loss of reputation and Company fines:
- What is meant by 'accounting systems' – would this naturally include the tax technology/IT system?

• What type / size of organisation benefit most from employing an indirect tax solution?

• What are the expectations / predictions for the future in terms of how tax / VAT / PAYE technology will look? Are companies looking to automate tax to the extent they will be operating with a ‘touch of a button’ solution?

• I work in tax with a UK group. From a risk management perspective, what do you advise re filing of our documents / correspondence. What e-filing systems are available?

Quite thorough and well thought out answers were given from a combination of the panel experts. The Senior Accounting Officer personally accountable question was heavily debated, with some conflicting views on what we could expect from HMRC on this. This questions could have potentially filled the whole hour of discussion, rather than the 20 mins it was granted. This really does sound like it will be a major minefield for FDs / CFOs of large companies when the rules kick in, and it was likened to the whole Sarbanes-Oxley regime that came in a few years ago.

The question about the future outlook of tax technology and could we see a 'push of a button' solution was healthily debated between the panelists and the attendees, with the general consensus that this is slightly in the realms of Sci-fi rather than practical realism, and that international businesses are so complex than human input can not yet be replaced by clever machines.

Initial feedback from the event has been very positive:

"Thank you Simon for organizing the event, the event also clearly marked that even with the technology today and virtual communication, people like to discuss and share information verbally and face to face, thanks from Holland"

"A great evening Simon. Many thanks for organizing the event. I made a number of new friends and reconnected with some old ones too. Budget Note 62 seemed a big topic, and one that didn't fit into the time our session allowed, so I'm expecting to see plenty of debate here over the coming days once the Draft Finance Bill has been published and digested."

"Thanks for the opportunity to present; it was very worthwhile from my perspective and actually I have had quite some interest from people looking to “link-in” on LinkedIn which is great testament to such a networking event."

Happy New Year...but not a happy tax market

By Simon Godley

Returning into this New Year (2009), we are seeing what was completed expected - a pretty dead recruitment market. On speaking to a number of Heads of Tax across commerce & industry, there is next to zero appetite to recruit additional tax staff. This is largely because the vast majority of commercial organisations have a recruitment freeze, thereby making it impossible to approve any recruitment. In some cases, if the size of an in-house tax team reduced last year due to people moving on, it is proving difficult to justify replacing them.

That said, the employment market seems to be reacting to the economic conditions as one would expect. We are now in full blown recession, which will possibly take another 7-12 months to run its course to completion, however the employment market will take a while longer to recover as hiring fresh people into a business won't happen until chief execs and business heads feel confident again about the business growth plans. This could be another 12 months beyond the end of the recession.

One positive is that although the Big Four firms have made some staff cuts (including tax professionals), these staff reductions have been relatively small compared to the total sizes of their tax departments. Then again, there may be more staff reductions during 2009, let's see how the market progresses.

Financial Meltdown? Yes, but what about tax jobs?

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.

UK Corporate Tax people - where are you?

By Simon Godley

Through my contact with clients and my awareness of current tax vacancies in the London market, particularly on the commerce/industry side, it seems that industry is really struggling to find and recruit UK tax accountants. I am referring to the classic scenario of a UK plc or multinational looking to hire a 'tax newly qual'. The hiring company initially envisages this as quite a straight forward exercise, thinking that there is probably quite a lot of them floating around, particularly after the ACA or CTA results are released. But it isn't, and more often than not it ends up being a disappointing, long and fruitless process, sometimes resulting in the company hiring someone from overseas with a non-UK tax background (NZ tax qualifieds are quite popular) or internally transferring someone from an accounting division and training them into a tax role.

So I thought this situation of the elusive UK Tax Accountant was worthy of further debate and investigation. I thought firstly I would initially try to guesstimate how many corporate tax (CT) newly qualifieds there are in London in 2008. I stress this is a rough estimate, but I think it gives a useful ball park figure.

I know that there was approx 120 tax graduates taken on by one of the Big Four in London in 2005. From this number, I have extrapolated to cover the London Top 10 firms (which will cover the vast majority of the large company CT market). I have then made some assumptions about what proportion of the tax graduates will stick with it through their 3 year training contract to qualifying. For example, there will be a percentage that will fail their ACA or CTA exams, and drop out of a tax career. There will also be a percentage who will simply decide it's not for them. I then assume, of those that qualify at ACA, a percentage will decide to take their qualification and use it in a different sector e.g. banking or management consulting, and therefore leave the tax market in 2008.

The number that I arrived at was 270. Let me clarify what this is - this is the estimate number of corporate tax newly qualifieds in London from the professional firms in 2008. Once again, I stress that this took some guess work, as it is not the sort of figure you can look up and find quickly on the Internet.

But wait - I think the majority (possibly 60% or so) of this 270 don't do any tax compliance or accounting work. The Big 4 firms in London have very much focused their CT divisions on planning/advisory, and a large number of CT qualifieds (even at newly qual level) no longer do tax compliance work. And it is the compliance and accounting experience that commerce/industry is looking for when it looks for a 'tax newly qual'. So this 270 could be easily reduced to c.100-120 CT newly qualifieds in London (that still do tax compliance work).

So this is now starting to explain why industry may struggle to hire UK Tax Accountants. Of a city with a 10 million population, there might be c.100 tax professionals who have the right skills to move across to industry as a Tax Accountant.

We then add to this the efforts on staff retention that the accounting firms use to keep their people e.g. overseas or internal secondments, regular annual promotions to the next level (which will lead to Tax Manager, and the challenging but 'gold at the end of the rainbow' type pursuit to Tax Partner), and we are left with a low number (say, 50 or less) of budding in-house UK Tax 'newly qual' Accountants.

And this is from a year (2005) in which the graduate intake into Big 4 would have been quite high. Just think how small the number might boil down to 3 years after a low graduate intake year!

Accountancy firms put recruitment on hold.....but tax is safe??

Source: AccountancyAge.com





Research reveals about 57% of UK’s top accountancy firms are putting recruitment on hold.

About 57% of UK’s top accountancy firms are going to reduce staff numbers or keep them the same next year, according to the latest research by online recruitment group cvmail, part of media giant Thomson Reuters.

Although only 5% of firms said they actually planned to cut staff, the survey signalled the first significant pause in the dramatic growth of accountancy firms since the 9-11 terrorist attacks.

‘The effect of the credit crunch on top accountancy firms has been felt in a slowdown in corporate finance work and may feed through into consultancy work,’ Andy Eddleston, cvmail commercial manager, said.

‘However, their core audit and assurance and tax work should be largely unaffected. It is hoped that the vacuum created by the slowdown in areas like IPOs will be filled with rescue and recovery work.’

SG comment: Reading the results of this article are no surprise, but I don't agree that tax departments will be largely unaffected. Some of the biggest fees that are made by top accounting firms are from lucrative tax consultancy projects on M&A deals or tax structuring advice. In a downturn economy, this fee income will drop dramatically, and the result will be to cut staff in these departments. Tax compliance departments may be less affected.

For more analysis on this, read my article on Recession, Redundancy and Re-hiring

Recession, Redundancy and Re-hiring.......and tax recruitment

By Simon Godley

I read an interesting article on a recruiter newsletter this week, which gave some analysis as to how the stock market, the broader economy and the employment market interact, and the time lags between events in these markets. Basically, it suggested that if the stock market crashed, then quite often (not always) this would lead to an economic downturn 6-8 months later. Redundancies may quickly follow this, then as the recession (if it is a recession) runs it course, then it could take a further 2 years before businesses are confidently re-hiring again. This is on the basis that a recession has historically lasted, on average, about a year.

So, this means that from stock market crash to businesses re-hiring would be a minimum time frame of 2.5 to 3 years. The last stock market crash started in March 2000 when the dot com bubble burst - I remember this because I sold some highly inflated priced biotech shares to pay for my now wife's engagement ring in March 2000, which is the only time that I really profited from the stock market. Then there was the downturn (which wasn't called a recession) and then finally re-hiring started to take place at the end of 2003, so almost 4 years. So the last downturn and then recovery took longer than expected.

So what should we expect this time. No-one can really predict with much accuracy. My feeling is that this time we haven't seen a stock market crash, but a burst in the credit bubble. Let's say this started in September 2007. So according to the above theory, the broader economic downturn should be felt May 2008 onwards. This seems to be the case - property prices are falling quickly, inflation is rapidly increasing, and some businesses have stopped hiring. There have been some redundancies in pockets of the labour market, but not (yet) in the tax market. This will undoubtedly happen, and let's see what the Big Four do over the next 6 months. Thus the prediction from now (June 2008), following the above theory, is that a recession will run its course over the next c.1 year, but the re-hiring won't start until March 2010, and this is being optimistic. It could be into 2011 when firms feel they are understaffed again.

2009 could be an interesting year for recruiters! Watch this space.

Tax Jobs - Weekly Highlights

Despite the reported troubles that the banking sector is experiencing at the moment, it certainly hasn't stopped them looking for tax executives for in-house roles when the need arises. This week I have heard of a couple of senior level EMEA type tax roles being recruited for, which backs up my view that in-house tax roles are generally safe during a down market, unless they are supporting a business or sector which is very exposed to the specific credit crises.

Here is a role which I am currently working on with a major UK bank:

Tax Projects Manager - London
£75,000 - £80,000 + Bonus + Bens
Click here for more details

Tax Jobs - How recession proof?

I subscribe to a few e-mail newsletters from various sources, one of which is The Motley Fool. They send through loads of information, opinions and recommendations about financial services products, and it's all quite good, honest, independent stuff.

Recently they sent through a brief article on which job sectors tend to be most recession proof. According to them, retail, consumer product manufacture, travel and hospitality businesses are usually hardest hit in a recession as people spend less on luxuries and leisure. Meanwhile vital industries such as health care and energy tend to weather the storm far better.

They also reveal that the Top 10 recession proof jobs in the UK are:

IT security professional
Project manager
Software tester
Computer programmer/developer
Network engineer
Business analyst
Pharmaceutical/medical sales
Child care worker
Web designer
Viral marketing professional

So it got me thinking how recession proof are tax jobs? Obviously, tax didn't make it into the top 10 of the above survey.

One argument is that surely we always need tax people, irrespective of how well the economy is doing? How does that saying go - there's nothing more certain in life than death and taxes? Having worked in tax recruitment during the last slump (2001 - 2003), I can safely say that this is not the case during a recession. The tax departments of the Big Four were heavily cut down, through 2 or 3 rounds of redundancies. Redundancies started off as voluntary in 2001, where people could opt to have their roles redundant, then in 2002 it got worse and sizeable numbers (into the 100s) of Big Four tax people were simply had to leave. I seem to remember that the most vulnerable seemed to be Tax Partners that were not big billers, and Senior Managers who were not going to achieve promotion to Partner. People in ACA / CTA training contracts were safe.

In-house tax teams of corporates and banks were not as badly affected, and in comparison, were relatively safe. With the exception of tax specialists working for companies in the high-tech sector or anything remotely like a dot com business. They were not safe, as it was those companies (and speculative high risk companies like Enron) which led us to the disaster in the first place.

So why the safety difference between Big Four/practice, and industry? This is because Big Four firms always (without exception) over-recruit during the good times - there is a 'war for talent' in the market and they look to seize all good tax candidates that are made available to them. If it is a bull market, herd like behaviour follows across the Big Four.

Commerce/Industry can't do this - a company can only recruit tax professionals for very specific roles, and has to go through a number of layers of approval before a recruitment process starts, so the hiring is much more controlled. Then when the downturn comes, if that company is particularly exposed in that downturn, then tax jobs may be at risk, otherwise they will be fairly safe.

I'm not going to make any predictions, but if I still worked in tax today, and given the looming financial problems, I would possibly prefer to be a Head of Tax for an energy or pharma company rather than a Senior Manager in a financial services tax team of a Big Four.

State of the tax job market?.......and let's be honest!

By Simon Godley

I've just read an article in one of the tax magazines (in a supplement focused on careers) whereby a number of recruiters are asked for their views on the state of the current tax market. The difficulty with such articles is that I'm not sure we are hearing the absolute true facts of what's happening, but merely a collage of comments filled with quite a lot of spin, that merely act as a sort of announcement advert for each of the recruiters' businesses.

For example, when one recruiter was asked about the Big Four firms, the comment was that most of the top 20 firms (let's assume that includes the Big Four) are set to increase head count. The fact is that currently two of the Big Four in London have pretty much put a complete hold on recruiting tax people.

Also, I think to play down what is happening in the London banking sector is not right - I have just come back from a meeting where I have learnt that 40 jobs of c.200 staff in the London office of a bank have just been slashed in the last 2 weeks.

On the subject of what's happening in commerce, one comment is that there is a demand for tax people within the FTSE 100 to grow their team. Again, I don't think this is the case. If you look at the size of a typical FTSE 100 tax department over a 10 year period, unless there has been a major structural change with the company e.g. it has been taken over, or has merged with another group, then the size of the tax department will hardly change. In-house tax departments don't grow in the same respect than, for example, a Big Four middle markets tax team may look to grow. Within a corporate, there is a fairly well defined remit of work that needs to be done, and that work will require a fairly fixed number of tax professionals to do it.

Basically when the broader enonomy has been hit with fears, and we have been recently - Northern Rock, sub-prime lending, rogue traders at Soc Gen to name a few, then the tax job market is not immediately or majorly affected. It is someway down the hit list of areas that are affected, however if this starts to have a major impact on organisations' profitability (particularly the likes of the Big Four) then I'm afraid that no-one is safe.

Tax Jobs - Weekly Highlights

This week, I'm just highlighting a couple of UK PLC Tax Manager roles which are currently active, and absolute classic first move roles for Tax Assistant Managers / Tax Managers within the Big Four / Top 10 firms, having completed their ACA/CTA training contracts. The market is still very short on that sort of candidate profile, the Big Four remaining to do quite well to retain their tax staff.

Tax Manager - FTSE 250 Group (Northern Home Counties)
£55,000 - £70,000 + Car + Bens
See More Details

Tax Manager - FTSE 100 Banking Group (London)
£50,000 - £60,000 + Bonus + Bens
See More Details

Tax Jobs - Weekly Highlights

This week I have a focus on banks ie tax roles in investment banks. Since my credit crunch article back in September 2007 on the impact on tax jobs in the City, it would seem that the panic is over (for the time being) and recruitment is back on. Although clearly 2008 will be a year where we see the negative impact on bonuses in the City, which I suspect will be of the order of 25-50% down from the last couple of years.

I highlight below some current searches for a few of the top tier investment banks in London:

Tax Director - International Planning
£80,000 - £120,000 + bonus
See More Details

International Tax Manager - UK Bank
£55,000 - £80,000 + bonus
See More Details

International VAT Managers - Top Tier Bank
£60,000 - £80,000 + bonus
See More Details

Where will we (and tax) be in 50 years?

By Simon Godley

Reading through the paper this lunchtime, I had one of those 'What is happening to the world moments?'. This was mostly driven by the first article reporting a 19 year old boy in Nebraska who had been on a shooting rampage in a shopping mall, killing 8 people, and then shooting himself. Clearly this is the behaviour of a very disturbed person, however the comment that caused me to reflect the most was that his suicide note revealed that he 'just wanted to be famous'. Fame? I couldn't kill a fly without feeling tremendous guilt, but I can kind of see the logic here. The boy becomes obsessed with famous people, maybe he develops some sort of resentment and jealousy that they are famous, and the only way he can quickly have the perceived level of attention that you get when you are famous is to commit this atrocity. The fatal flaw in his plan - he never got chance to enjoy his very short lived 'fame'.

My thoughts then turned to the concept of fame. When did fame begin? My conclusion to this was when media started, when things were reported about people, when newspapers were written, and then fame possibly caught on a lot faster when people could go and see a moving picture - this is when you can really get to 'know' someone in terms of their looks and personality. Therefore, fame has evolved out of technology.

The next article was more revelations from HMRC and their breaches of security. The acting head of HMRC David Hartnett, being quizzed by the Treasury select committee, was putting the breaches down to 'systematic failure'. Sounds a bit like blaming technology to me.

Thirdly, how did the wife of the 'dead' man from the canoeing accident get exposed for potential fraud - someone had found a picture of him and her together in Panama, which had been posted on the internet, dated July 14 2006. His 'death' certificate is dated 21st March 2002. Once again, technology (ie the internet) playing a significant part in the process.

So the opening pages of today's newspaper reveal three articles where technology has played a significant role, two times in a very harmful way, and once in possibly a helpful way.

So what on earth has all this got to do with tax? Well, what about tax technology? Surely a good thing in the UK, for example, where tax and accounting rules become more and more complex. The idea of the tax compliance process being fully automated, with clever software that is coded into ERP systems, pulling out the relevant tax (and VAT) numbers and placing them in the correct fields of a tax computation. So where's the downside, is there one?

To digress slightly, I recently took a trip to France to buy some booze for Christmas, and decided to stay overnight in Boulogne. From the point of deciding to make this trip, the first time I actually spoke to another human being who was incidental to my trip was when I said bonjour to the receptionist of the hotel in Boulogne, after buying my booze. Everything I had to do up to that point, including buying a channel crossing and booking a hotel room was totally automated. So technology also removes chains of people, and hence removes jobs.

So I guess the big fear with tax technology is the impact on tax professionals' jobs. Going back to the troubles within HMRC, we have already seen 12,500 job cuts as a result of the Inland Revenue merging with HMC&E, and the plan is to cut another 12,000. This was highlighted recently in Taxation Magazine, with Mike Truman launching his 'Stop the Staff Cuts' campaign. As tax technology improves and becomes fully integrated into large PLC, are we going to see an evaporation of those working on tax compliance?

We have realised that we can't live without technology and computers, but hopefully we will realise that even though computers do clever things, and save us time, they have no common sense or imagination, something that only humans can possess.

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.

Back into tax after a career break

By Simon Godley 29 October 2007

I have recently worked with two tax candidates, both looking to get back into the tax market following rather lengthy career breaks. One had decided to move on from a Tax Manager role with a major London bank, and take a cultural sabbatical to Latin America, lasting 3 years. The other person had been offered an attractive pay-off from a professional firm in late 2001, and decided to pursue various academic interests, amounting to a 5 year career break.
Both candidates found good quality tax positions within a matter of months. Both had to take a step back in level, but my feeling is that within a one to two year time frame, they will both be back up to a level where they left off before their career breaks.

Time Out of Tax
The longer you take out of the tax market, the higher the risk of not being able to get back in. Tax is an area which is constantly changing, and so the landscape can look very different if you haven’t been around for, say, 3 years. If however you decide to go off travelling for 6-12 months, and cannot arrange unpaid leave with your employer, then getting back into a new job on your return shouldn’t take too long, depending on the underlying demand in the market on your return. This latter point is key - if you had decided to go trekking in the Himalayas for 12 months at the point when Enron collapsed, you may have found a few more ‘closed doors’ on your return. In fact given the current nervousness in the financial markets, now may not be the ideal time to take a (short) career break.

Practice vs Industry
Depending on your role and tax experience before the career break, you may be looking at a route back into a tax team within the professional firms, or into an in-house tax role. If your previous experience has been largely corporate tax within industry, then you will undoubtedly find least resistance to finding a role back in industry. If however you have grown up within a Big Four corporate tax team, for example, then you could look at roles within both practice and industry. If you have taken a long career break (18 months or more) then instantly stepping back into a professional firm could be more difficult, as there is more of an emphasis on being technically up to date and conversing fluently with clients on complex tax matters. Industry can be less concerned about technical know-how, with the emphasis being on practical tax accounting skills, and to be able to communicate and connect well with senior finance and business heads in the group. Things like interpersonal skills and commercial maturity will hopefully not wear off, and indeed may improve, through taking a career break.

Getting back in – some tips
• Closely review new roles appearing on tax job sites and the tax press, for example etaxjobs.com, taxcareersonline.co.uk and taxation-jobs.co.uk and respond to those that closely match your prior technical experience
• Apply for interim roles e.g. 3-6 months tax contracts in industry, requiring your prior technical experience. This will get you back up to speed with some of the tax rules, and could possibly lead into a permanent role
• Use your network – contact ex-bosses and colleagues to see if they can point you to a route back in. They may have heard of roles in the market, and your ex-boss my offer you a job again, should you be happy going back to the same employer
• Keep in close contact with recruiters – if there is now a gap on the CV because of a career break, then making it onto a shortlist for a role will be more difficult. You need to be regularly picking up the phone to them, keeping on their radar for when new roles/contracts come up
• Do some technical reading to find out which areas of tax have mostly changed in the time you have been away. This will not help to get you interviews, but ultimately will show in the interview that you are making efforts to get back to speed

What's on a Head of Tax's mind currently?

Source: Bob Reynolds, editor of International Tax Review (8 October 2007)

I asked a group of eminent tax professionals recently what were the most pressing tax issues on their desks at present. As you might expect, transfer pricing emerged as the consistent number one. The sheer complexity of transfer pricing issues and the unpredictability of outcomes was a familiar theme.

The second topic was tax audits. One global tax director said: 'What gets me is the fact that often revenue authorities do not understand our business. They do not appreciate how we arrive at our assumptions for tax due and therefore they decide to impose a stringent tax audit.'
He says that these audits rarely reveal anything. So the authority in question is no better off at the end of the process. An illusion of activity has been created and nothing else.

'They still have no greater appreciation of where we are and so they sit and gestate for six months. Then they put in another audit. This can go on two or three times.'
He points to the absolute frustration of being involved in an exercise which is time-consuming and expensive but which is generally fruitless. I have found echoes of this theme throughout the world.

Credit Crunch - Impact on in-house tax jobs?

I am now hearing from a few independant sources of recruitment freezes affecting the large corporations and global banks in London that are looking to recuit. This is all quite worrying, and it would seem that this time the banks are not being slow off the mark to bring down the recruitment shutters. Although I guess this time the potential financial crises is happening in their back yard, rather than being sparked by an Enron or dot-com crash, and so they should know when to stop hiring.

Bob Reynolds, editor of Tax Careers, comments in their latest issue that recruiters are in somewhat of self-denial about what may happen to jobs in financial institutions, and that their attitude seems to be stay calm, your jobs are safe, everything will be OK. Bob responds with 'The banks will make some cuts and then, if the global economy improves, attempt to recruit again'. I would tend to agree with Bob on that.

If this potential crises does end up hitting us all hard, then in terms of in-house tax jobs, I suspect that it will be the major top tier banks and corporate giants that will need to cut in some areas, but generally in-house tax teams tend to stay fairly resilient in down turns. Tax teams within second tier banks and most other FTSE companies should stay at roughly the same size through a turbulent time. Some stand-alone tax roles may be at risk, but I think it will depend on their particular corporate sector.

The current nervousness in the market could all blow over in the next few months, and us recruiters will be smiling again, but I sense that the next couple of years could be a bit more difficult.

Tax Compliance (in-house).........in a different location?

Over the last 2-5 years, some of the large groups (mostly UK PLC) have relocated their tax compliance team to a different location in the UK. Typically with a HQ tax function based in London, they have moved the CT compliance function to somewhere like, eg Bristol or Sussex.

I have spoken recently with a couple of tax contacts in industry, and I am not entirely sure of the rationale here, maybe I am missing something?

Looking at the cost side, which is always the main driver, there will be theoretically a lower cost (ie lower salary) if you have someone based in Bristol rather than London. However, the supply of skilled candidates in that location is vastly reduced, companies often find that they can't recruit someone within the budget, the budget gets stretched, and they have to offer a salary that is closer to London levels anyway. Whilst the role is vacant, they have the option of hiring a temp/contract tax person, but the cost of the this will be higher (due to premium hourly/daily rates for temps) than a full time person in London. There is also the not insignigicant recruitment fees for hiring the people in the new location, partly because they will struggle to get people to relocate in the same role.

Clearly the other main cost is the rent/lease of the space needed for the team. I don't have details of corporate rents, but it may be a significant cost reduction to have 4 tax accountants sitting in Swindon rather than London, I'm not sure. This could be where the answer lies.

The other issue is communication, which has much more of an intangible value. The question is whether a tax compliance person will pick up more relevant information, and therefore do a better job, if they are sat with the other group tax members, compared to being sat in a far off remote location. My feeling is that they would pick up relevant information quicker if they are sat with group tax in London.

The caveat to all this is that I am not a Head of Tax trying to stick to a tight budget, and no doubt I am missing several other issues on this subject.

Any comments / debate on this very welcome.