Tax jobs trends for 2010 - Part 1

The global liquidity crisis of the last two years has produced such a volatile, and at times unprecedented, setting for business, that the predictions of even the most learned commentators have been wildly incorrect. Director Iain Lorriman utilises his experience of a decade in recruitment and over four years in a Big Four banking division to offer insights into the tax jobs market in 2010.

When Eddie George addressed Pure's CFO dinner in January 2008, he informed us that the crisis 'in the US banking system' was not systemic and unlikely to have a profound effect on a robust UK economy. Back in January 2008 a senior banker advised us to work through the pending economic downturn by 'partnering closely with world-class businesses'. He recommended Lehman and Bear Sterns. Pessimism has unfortunately been the most accurate recent wisdom.

But what is the market telling us about 2010 trends in tax? Are the green shoots going to be nourished or scorched? I shall seek here to identify trends that have become sufficiently established for them to achieve consensus that they will feature throughout 2010.

Bad news first

With budgets and headcount plans largely in place for 2010, the resulting picture is one of slow growth and institutions targeting wins in market share rather than absorbing market growth. With the exception of the banking industry, and a small number of distressed professional service firms, headcount reductions in UK tax have been minimal.

Combining this with modest growth plans means that roles and career opportunities in tax look set to remain limited in the coming year. The financial services sector has demonstrated that it can either underpin or undermine the UK global economy. But a substantive recovery will require improvements in liquidity, sentiment and mainstream corporate activity, along with a return to health of the cash-cow areas of M&A, private equity and real estate.

Of these only the most fragile, sentiment, has shown a promising upward trend; for now. M&A has shown some signs of a sustainable market upswing, but is a long way off a respectable volume. Professional services firms by necessity have many of the same dependencies affecting their fee income.

Advisers have also borne the brunt of a sustained downward push on pricing. Opportunities will therefore be limited. The supply of candidates still outweighs demand. Yet an exaggeration of this perception has led some employers to raise the bar above the level of the candidate pool at a time when the top 10% of candidates are being more closely protected by their institutions than ever before.

Of course skilled tax professionals still continue to make career-enhancing moves.
Moreover, our clients who choose to take advantage have been able to make extraordinarily good hires. But these processes are competitive and challenging: ‘The right talent for the right times.’ Everyone needs to remain realistic for 2010.Those between jobs may need to consider more seriously the merits of interim and interim-to-permanent solutions. Those currently employed need to take very good advice. Often our advice is that you should stay put. More suitable options will come along. The best time to consider your options is always when you don’t absolutely need to.

So where's the good news?

Volatility and change create opportunity. So does regulation. Businesses have now largely put in place the mechanisms to adapt to a prolonged downturn. These have various implications for tax, some of which require an increase in the nature and value of the tax treatment and the role of the tax practitioners.

Corporate governance, a greater focus on risk management, requirements for improved liquidity, the decentralisation and migration of multinationals and the push-pull of in-sourcing versus outsourcing all have tax and personnel implications. The greatest need as the market picks up will be where people have cut back too far on staff numbers. So amid the downturn there are new roles and revenues to be won.

VAT is a real-time tax, collected and paid at source. Given the heightened demand for liquidity among corporates, any mechanism that so directly impacts on cashflow is bound to come to prominence. VAT planning is in demand. VAT projects, systems implementation and international VAT planning can materially affect cashflow. VAT compliance and risk requirement meanwhile change with each new wave of legislation and regulation. Opportunities for VAT practitioners in-house, for interim VAT project leaders and a modest growth in Big Four VAT practices were a feature of Q3 and Q4 2009, and they look set to continue.

Transfer pricing and supply-chain management experts were the most sought-after people commodity in 2009. Multinationals account for 60% of world trade. National authorities worldwide have increased the challenges to transfer pricing regimes and the penalties for any breach. Previously benign TP regimes such as Spain have made tackling TP systems a core objective. Supply chains continue to expand in geography and complexity. The benefits of getting transfer pricing right and the penalties of miscalculation are huge. It is no surprise then that two of the Big Four posted revenue growth from their transfer pricing teams at 32% and 28% respectively.

See the second part of this report is published here: Tax jobs trends for 2010 - Part 2