Tax has been in the commercial spotlight throughout the last decade and remains high on the agenda of companies and governments alike. These are interesting times, with tax policies having a major impact on key corporate decisions.
For those starting out in their career, the constantly changing landscape of tax offers a wide variety of issues to tackle. However, graduates will need to keep up with the ways in which businesses and accounting practices will manage their tax affairs in the future, to access sought-after jobs in an increasingly competitive market.
Looking ahead, we can expect the effects of corporate global expansion and increasing regulatory control to become even more pronounced. In addition, we can assume that tax will continue to be a key focus for governments, as they attempt to replenish their treasuries and for companies, as they seek to manage the level of tax for which they are liable, both in the UK and internationally.
Changes in corporate tax strategy
Growth abroad is now an essential part of corporate strategy. With the increase in cross-border trade and as companies look to establish their businesses overseas, they must ensure that they operate as efficiently as possible from a tax perspective, whilst preserving the aims of their overall corporate strategy and keeping their risk profile manageable.
Moving tax in-house
Gone are the days when the majority of large corporates assign all tax matters to accountancy firms. Increasingly, companies are now setting up/building up their own in-house tax functions. This not only reduces the fees the companies pay out to external advisers (crucial in the current cost-cutting environment) but also ensures that these companies have full control over their tax affairs and can mitigate risk accordingly.
Depending on the resources of the company in question, this may leave just the most time-consuming work (such as the preparation of tax returns) and/or the very complex/deeply technical issues to be out-sourced to external advisers.
This increase in companies taking in-house ownership of their tax work is happening further afield than just the UK. In the last 18 months, demand for in-house corporate tax professionals across Europe, the Middle East and Africa has increased significantly – and over the next few years, opportunities in the rapidly developing economies for graduates with relevant foreign language skills are likely to increase.
As a result, accounting firms are also facing new challenges as they adapt to the changing profile and global activities of their clients. Firms are now required to service their clients internationally and provide consistent, high quality advice across the globe. The increase in the sizes of the in-house tax function also means that they are becoming extremely focused on providing the specialist advice required by their clients.
Increase in regulatory control
One of the key changes to the business world over the last ten years has been tighter regulatory control across all areas of business, including tax. This really started in earnest as a result of the collapse of Enron in 2001, which sent shock waves throughout the business world and led to the dissolution of Arthur Andersen, one of the largest accounting firms at that time. The impact of this crisis led to the introduction of tight controls for tax and other areas of the business that require global compliance.
In addition, increased cooperation between tax authorities in different jurisdictions is becoming increasingly risky, while compliance with regulations is gradually becoming harder work. As a result, businesses are bolstering their tax capability across the board to meet these additional regulatory requirements and, depending on their corporate strategy, to minimise risk.
Increasing demand for specialist tax roles
As companies prioritise efforts to control/reduce their long-term effective tax rate, quick wins for cutting costs are increasingly important for a company’s profit line. By reducing their exposure to indirect taxes, companies can immediately see savings, which is critical in an uncertain economic climate. To capitalise on potential savings in VAT, dedicated tax specialists are often sought-after both within accounting firms and in-house.
Another key area where specialists are in demand is Transfer Pricing – i.e. very broadly, ensuring that each country taxes the right amount of profits. This is a huge area of growth as, particularly in light of the current economic crisis, every tax authority seeks to tax as many profits as possible.
Increasing use of interim/contract workers
Another trend which looks set to continue is the increase in demand for interim or contract tax workers. This is often an attractive option for employers as it provides companies with the flexibility to cover gaps in resource and meet specific needs when required, whilst controlling costs.
Over the last two years, interims have been increasingly relied upon to provide additional capability as the demands of legislative changes and compliance has grown, whilst permitting companies to avoid headcount freezes. Although contract work is usually more common at the senior level, roles are open to junior to mid-level candidates, particularly those who might be considering making a career move from practice into industry.
Looking ahead, it is increasingly clear that prospective tax professionals will often need to be commercially aware and think globally in order to progress in their careers. The increase in regulatory obligations will also provide ample opportunities for tax professionals who wish to focus on tax compliance, tax reporting and tax accounting.
Encouragingly, companies are actively targeting graduates for high profile careers in tax, which will no doubt continue. Opportunities are often varied and challenging with international prospects, particularly to those with additional languages.
However, the market will continue to be competitive, with limited roles in large high-profile multinationals and the top accountancy firms. It is therefore important to start thinking about gaining a qualification that will stand you in good stead and what kind of company/firm would best support your ambitions, taking into account career progression and future opportunities/moves.
Ultimately, for those with the commercial acumen and ability to take advantage of this new landscape, the opportunity to make your mark within the tax industry is assured.