Down to the nitty gritty

HOW IS THE JOB MARKET FOR IN-HOUSE TAX POSITIONS HOLDING UP? ALLISON PLAGER INVESTIGATES


Hard hats, steel tip shoes, wooden pallets, JCBs, overalls and fork-lift trucks are not ordinarily what spring to mind when you think about working in tax. Office life tends to be rather more gentile: sitting at a desk working out a particularly tricky deal, foraging in Tolley’s Yellow Tax Handbook or Lexis®Library, and meeting clients to discuss the next step.

The problem for some is that working in practice means that you see tax in isolation, although it is often undoubtedly interesting and stimulating.

One way of being able to see the whole picture is to go and work in the tax department of a company. This way you get to see an industry in action, be it insurance or cement pipe-making.

But while the tax department clearly is not involved in the manufacturing or core processes, it is intrinsically woven in to the business to ensure that its tax affairs, from VAT to corporation tax to landfill tax, are dealt with efficiently and correctly.

Attractions

There are many reasons why people want to move into industry, for example the opportunity to make a difference to the bottom line of a business, the benefits available and for the type of work on offer. Indeed, many professionals are content to stay in house; as Georgiana Head, director of Georgiana Head Recruitment says it is ‘quite rare for tax specialists who have worked in commerce to want to return to practice so there is also a lifestyle choice involved’.

In Mike Longman’s experience, one of the attractions for people moving into in-house tax roles is the fact they can use it ‘as a spring board to move out of tax into a more general financial, commercial or managerial role. This is often appealing for people who have come into tax from an initial accountancy background and fancy using their broader commercial skills’.

He says there are various examples of this, ‘including one recent case where a senior tax manager at a FTSE100 group has been promoted to a really interesting role as executive assistant to the group’s chief executive officer’.

Mike suspects that ‘this aspect is particularly relevant at the moment for people who have been made redundant and who, as a result, are perhaps taking stock of their career and fancy trying something different. An in-house role can often open the door to a wider range of “sideways moves” out of tax than the profession can’.

Not immune

It may be tempting to think that the tax department of, say, a public limited company, is less affected by the recession than practice. This is not the case necessarily.

As Georgiana says: ‘The in-house market has been hit by the recession in much the same way that practice has been hit. Many plcs are cutting their tax teams as part of group redundancy programmes, so we are seeing redundancies and enforced early retirement programmes particularly in the financial services sector. We are also seeing several plcs being taken over by others so there is unrest where there are two tax teams and neither side knows which will survive the merger’.

As a generalisation, says Mike, ‘working in house is more recession proof than working in practice’. This is because ‘most in-house teams are based on a critical mass of tax professionals and are not often over resourced. As such, when there is a downturn, the number of redundancies out of in-house tax teams is limited when compared with practice’.

Certainly companies still have to deal with tax, regardless of the state of the economy. As Brewer Morris’s Matthew Gravelle points out, when things get tight, a company will be even keener to make certain that it is getting any tax repayments due and deal with the VAT properly.

However, not all companies are suffering. Georgiana points out that, for example, oil companies and some technological companies are still recruiting; although she adds that while roles do exist in the UK, ‘they are few and far between, particularly in the areas outside of London’.

Recruitment freezes have been introduced by several companies over the past six to nine months, says Will James of Integral Search & Selection, but he adds that in the same period, ‘a number of smaller companies have taken tax in house for the first time, perhaps as result of wanting to cut advisory costs’.

He also notes that ‘in recent weeks we have witnessed a slight increase in activity within the in-house market, which is either a reflection of more confidence in the future or, perhaps, businesses needing to recruit before the summer months’.

Good move

So would moving to an in-house role be a good idea for someone currently working in practice or who has been made redundant from practice? Well, quite apart from the fact that there are not necessarily more jobs available in house than in practice, it is important that anyone making that move, really wants to do it.

As Matthew says, taking a role in a company must not be a ‘second-best option’ and that if that is how the candidate feels, it would almost certainly come across in interview.

Mike Longman agrees that ‘it is important to look at in-house roles for the right reasons. Most people consider going in-house to gain a more commercial hands-on experience where they can see, first hand, their work having an effect on a business over time’.

The rewards

When it comes to salary, traditionally in-house pay has been stronger than in practice (disregarding director and partner grades). Will says that ‘the structure of packages for in-house roles is often made up of several layers over and above base pay. This can include a bonus, car allowance, share schemes, pension and other benefits such as medical and travel insurance’.

As ever, regardless of the recession, which has restricted recruitment budgets across board, he says ‘businesses are still willing to pay a premium for the best talent in the market’. It could even be that salaries prior to the recession were slightly inflated and that the downturn has now corrected this position.

It might be an issue for some that the salary differential becomes considerably more apparent at the higher levels. Georgiana notes that once you get to a certain level such as tax manager ‘the salaries tend to even out between practice and commerce. Then at the most senior end of the market you find that practice pays better than industry.

'An experienced head of tax in, say, the Manchester area working for a major blue chip company is, at the most, likely to have a salary of £160,000 (and that would be for someone exceptional) and a bonus entitlement of perhaps 50%, meanwhile an exceptional partner in a successful accountancy practice with a similar level of experience might earn up to £800,000 in the same region.'

Overseas roles

Working overseas often has great appeal for tax professionals, especially as a means of broadening their experience and making themselves more attractive as employees when they return to the UK.

It can be a good idea to explore overseas roles, says Matthew; but it is important ‘to look at each role on its merits’. You have to consider what your long-term goals are, ‘rather than think solely on the job on offer, think about the job after that’. Does it all fit in with your career plan?

As to the job market, ‘good opportunities do exist’, says Matthew, for example in Switzerland and countries where the other groups such as Fortune 500 companies often have European offices. He mentions that a candidate has recently been recruited for a role in the tax department of a FTSE company in the Netherlands.

To this end, Will says ‘candidates can often secure in-house roles overseas, but it very much depends on the type of tax they are involved with and where they are willing to work.

'Most in-house roles overseas are appropriate for more senior tax professionals who either have a specialism in international tax or more niche areas such as transfer pricing or high net worth individuals (especially relevant for banking roles). It should be mentioned that it is very difficult for someone working in the UK to secure an overseas role that focuses on local taxes.'

He feels that, in the main, ‘it is easier for more junior tax professionals to secure an overseas role or secondment through working in practice’.

Prestige

Competition for each in-house role is pretty tough, and ‘this particularly noticeable’, says Georgiana ‘when the market is in a down turn’.

It may also be due to the fact that there are fewer roles in house than in practice, but it is also due to demand and the prestige that is associated with an in-house role.