Thankfully saying Goodbye to 2009

My expectations for 2009 as a year for recruiting were very low, and the year has very much met my expectations. It has been a very bleak year in the market, and of course the tax market has not escaped the pain.

Looking forward to 2010, I think conditions will remain difficult, but I suspect will be a slightly more free market as companies and business plan for their recovery, and hence recruit for the recovery. Any yes, tax rules and legislation continues to become more complex and onerous, and hence a need for astute tax professionals.

In the meantime, may I wish a wonderful (and white) Christmas, and a very peaceful New Year to all readers of this Blog, and indeed to all tax professionals.

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.

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.