Profiles
CAT | Tax
1
Financial transactions tax: Robin Hood or a ‘catastrophic’ proposal?
Comments | Posted by Guest in Financial Services, Tax
In 1978, economist James Tobin proposed a tax on cross-border currency transactions. This tax would occur every time a stock, bond or derivative was purchased or sold.
This concept may now be implemented in the EU. Its aim is to slow down the number of speculative dealings and provide a vital source of revenue. A vast volume of transactions is seen to contribute to volatile currency markets and economic instability.
Economic and ethical arguments are used to support the tax. The European Commission acknowledged potential detrimental financial impacts whilst using these arguments to justify continued support. For advocates, FTT is an essential reaction to the increase in foreign exchange trading.
Opponents have reacted quickly with a number of reports being published. Current criticism focuses on the negative socio-economic impact of financial trading shifting away from the EU. In London, thousands of people work in foreign exchange markets and, according to Allister Heath, approximately 45% of currency trading is in the ‘swaps market’. Ernst and Young argued this week that FTT would damage the GDP of EU states and AIMA stated there would be significant harm to EU cross-border trade.
International financial instability calls for a new international structure but is Tobin Tax the answer?
By Beth Horne
Researcher, Tax In House & In Practice
T: +44 (0) 2070 092 0137
E: bhorne@morganmckinley.co.uk
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Accounting, Finance & Support Salary Survey | UK 2012
Comments | Posted by Chris Leeson in Accounting and Finance, Careers, Commerce and Industry, Morgan McKinley, Tax
Click to view the Accounting, Finance & Support Salary Survey | UK 2012
To gain insight into hiring and salary trends for 2012, we surveyed 350 senior-level operational and HR managers working in accounting, finance and support. We targeted three areas: commerce & industry, professional services and the public sector.
These are clearly diverse markets but overall, the outlook is that there will be modest growth in 2012, at a rate similar to 2011. Positively, more than half of the firms we surveyed (including multinational corporations and SMEs) have hiring plans for Q1 2012.
On the whole, salaries are expected to remain relatively stable in 2012. Increasingly professionals are considering ‘holistic’ packages rather than focusing on basic salary offers. Elements such as flexible benefits, work/life balance and professional development are becoming more important to job seekers.
We hope you find this salary survey informative. If you have any questions or feedback, please feel free to contact me directly on +44 (0) 207 092 0078 or email cleeson@morganmckinley.co.uk.
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Just released: Accounting, Finance & Support Salary Guide, UK 2011
Comments | Posted by Chris Leeson in Accounting and Finance, Careers, Commerce and Industry, Tax
Our latest report provides insight into current salary and hiring trends for accounting, finance and support professionals working in commerce and industry (C&I), professional services and the public sector.
Click to view the Accounting, Finance & Support Salary Guide, UK 2011
These are clearly diverse markets but overall, the recruitment outlook is much more positive than at the same time last year. Our market knowledge, and anecdotal evidence from our clients, points to 10-20% growth in hiring activity across the board in 2011. Although this is a pleasing forecast, hiring levels are still relatively suppressed when compared to pre-recession data.
The C&I, professional services and public sector recruitment markets felt the effects of the global financial crisis in H2 2009, around 12 months after the financial services sector. It is a similar scenario with market recovery; while last year saw a rebound for financial services, it is predicted that 2011 will be the year of measured growth for C&I, professional services and the public sector.
We hope you find this salary guide informative. If you have any questions or feedback, please feel free to contact me or any of my colleagues here at Morgan McKinley.
Chris Leeson
T: +44 (0)20 7092 0078
E: cleeson@morganmckinley.co.uk
Chief Operations Officer Accounting, Finance & Support, United Kingdom
Over the coming weeks, Morgan McKinley’s In-House Tax team will guide you through the process of moving from practice to an in-house environment. In this first blog, Paul Miller discusses how to differentiate yourself from your peers through a tailored CV.
So, you’re ready to take the step into your first in-house role. When starting your search you will discover that you are competing against a number of your peers who have similar experience and qualifications. The big question is; how do you set yourself apart and not only gain interest from a prospective employer but also that elusive first interview?
It makes sense to start by thinking about why you want to work in-house and what the key differences are. By working in-house your ‘clients’ will change from several companies or groups to one group. This group will more than likely comprise several departments and a high number of stakeholders all requiring input from the tax team. You will be dealing with a wide range of people with varying experience and many with limited tax knowledge.
By understanding how your role may change, you can start to think about the skills a future employer will be looking for and how you can demonstrate these on your CV.
Pankaj Shah, Head of Tax at Investec advises “the information an applicant gives has to be relevant to the organisation and the role they are applying for.”
Therein lies the answer. If you are applying for a role at a bank highlight your knowledge and experience with the financial services market; if you are applying for a compliance role, demonstrate your knowledge of the compliance / reporting process. It sounds simple but be specific to the job you are applying for using examples and show why you are one of the most suitable candidates available in the market.
Clearly outline your industry sector experience and where relevant provide examples of clients you have worked with. A strong selling point will be to give information related to any secondments you have held as not only will this demonstrate your technical ability but also that you understand the cultural differences between working in-house and practice.
Discuss with your recruitment consultant the specific skills (both soft skills and technical knowledge) that are required for the role you are applying for and how best to pitch yourself for the position. This will make a significant difference throughout your job search and may prove the difference between success or disappointment. All in all, your experience will remain the same but it’s all in the presentation!
Those of us in the market for a new company Ferrari or Bentley will be shocked and saddened to hear that from April 6th the current £80,000 maximum list price cap on vehicle tax will be removed. As a result of this the level of tax top executives pay on their company supercars could quadruple.
Many senior execs are cruising around in company-owned Ferraris, Bentleys, Aston Martins and Lamborghinis, and pay a maximum income tax of £14,000 and NICs of £3,584 pa under the current rules. They’re in for a shock. From April 6th a high-flier driving a Ferrari with a list price in excess of £220,000 will pay a total tax and NICs bill of almost £50,000, an increase of over 180%.
Second hand cars are no bargain either because HMRC charges car benefits on the list price; the price of a brand-new vehicle. Therefore, a five-year old Ferrari purchased for around £65,000 will have a tax bill based on its list price of £175,000 resulting in a total tax and NICs bill of around £40,000. This doesn’t seem like a very good deal to me.
Originally introduced by Alistair Darling in 2009 at the recession’s lowest ebb, increasing the tax rate on executives driving supercars is an easy target for the government. It’s hard to argue against a tax on a select group of wealthy individuals driving cars completely inaccessible to most but in reality it’s hard see how this can make much of a dent in the UK’s enormous national debt.
On the other hand, I think we’re likely to see fewer supercars on the roads over the coming years; that’s not necessarily a good thing either aesthetically or in terms of improving confidence in the economy.
From January 2011, VAT is set to increase to 20% in a move the Chancellor expects to raise around £13billion annually, to pay off the UK’s monster deficit.
Many have welcomed the changes, heaping praise on the government for avoiding any additional reliance on income tax payers. This move towards indirect tax has also been popular with other European governments.
That’s all well and good but as a regressive tax, any increase in the rate of VAT was always going to be controversial. Predictions as to how this affects household budgets average out at around £400 annually; this could hit poorer families very hard indeed whilst high earners are unlikely to feel the pinch in quite such a painful manner.
The effect on business is likely to be mixed. For those unable to recover all the VAT they incur, the increase will represent a significant hike in operating costs. For businesses close to the edge, this could be the final straw. The winners are likely to be the biggest companies, able to absorb the costs gaining market share at the expense of smaller rivals.
In the public sector, the NHS for example is likely to feel the pinch as the increase will reduce the amount of real cash available for frontline services. Other key public services are likely to suffer similar effects.
As the increase will take much needed spending power out of the economy, there’s a real possibility of it affecting our fragile economic recovery. Growth figures over the last six months have been outstanding but concern is growing that this spending flurry could be the result of an increase in spending prior to January’s VAT-fuelled price-hike. A higher rate of VAT will not be the sole cause of a double-dip recession but currently, the economy needs all the help it can get.
The Exchequer’s coffers are running on vapour and tax avoidance presents a soft target for politicians. On Monday, Nick Clegg claimed that “ethically wrong” legal tax avoidance costs the economy £42 billion a year. As a tax recruiter, I was particularly interested in whether this might have an impact on the taxation professionals that I work with.
Clegg’s Robin Hood approach is an obvious means for the Government to rake in some much needed cash. My colleague William Hepworth discussed the tightening of transfer pricing rules in Taxation 2 magazine this week so raking in some extra cash through taxation is already on the agenda.
As always though it’s not as simple as closing a couple of loopholes and suddenly the deficit is paid off. Quantifying the impact of tax avoidance on the economy is complex stuff. Business leaders argue these funds are reinvested in job creation: taking people out of the benefits system and getting them paying tax. Ultimately, the Exchequer wins anyway.
Furthermore, high net worth individuals are often entrepreneurs, contributing to the economy in areas too numerous to quantify. They’re also geographically mobile; remove the incentive to be here and they’ll be off quicker than you can say private jet.
Clegg’s ethical argument is also complex. Is it wrong for someone like Philip Green to run a business employing thousands of people in the UK with a turnover in the billions whilst himself being resident in the tax haven of Monaco? Is investing in start ups or venture capital unethical? Is investing in an ISA unethical?
Our tax system is a pretty fine balancing act between encouraging investment in quality business in the UK and ensuring people pay a fair amount for public services. Cutting down on tax avoidance strikes me as great party conference PR but ultimately it’s a minefield. Amidst all these conflicting interests and arguments it’s hard to quantify their success/failure anyway which itself is most convenient don’t you think?
Recently, there has been much scaremongering regarding the prospect of a W-shaped recession. In my opinion, people have got carried away, as it’s not all doom and gloom from where I’m standing.
The trouble stems from the Bank of England’s downward revision of their projected growth figures for 2011 from 3.5% down to 2.5% as well as Mervyn King’s ominous description of the recovery as “choppy”. Judging by the newspaper headlines last week, you could have been forgiven for thinking that our fragile confidence was about to be destroyed.
Do not be misled though as I would prefer to look at all this as the bottle being half full rather than half empty. The Bank of England is forecasting 0.7% growth for the last two quarters of 2010 and growth in excess of 2% next year. The Office for Budget Responsibility is also forecasting growth around the same level. Last year, we would have revelled at the economy growing at all, so 2.5% is still very encouraging.
Certainly, with regard to taxation, activity is increasing.
So far the focus has been on Indirect Tax and Transfer Pricing; understandably so, given HMRC’s desire to tighten the rules. Perhaps more encouragingly there has been some increase in corporate tax hiring. So far this has been limited but given the more general nature of this area, it’s an excellent barometer.
There is still little movement at the senior end of the market currently as senior tax professionals are choosing to stay put as present. However, with a bit of economic growth and some more confidence, they will become more inclined to move on and then we’ll see demand return.
My view is that the recovery is going to be slow and possibly “choppy” but it’s still a recovery and that’s definitely cause for positivity.
This week saw the establishment of the Office for Tax Simplification. In George Osborne’s words Britain has “one of the most complex and opaque tax codes in the world” and his “dream” is to bring some transparency to this.
The new body, headed up by Michael Jack (a former Conservative minister) and John Whiting (formerly of PwC) will initially look at two areas: firstly, streamlining all 400 tax reliefs, allowances and exemptions; and secondly, looking to simplify the tax system for smaller businesses.
So far, reaction seems to have been mixed on this one. Much concern has been expressed that simplification may act as a means of increasing the tax burden across the board through scrapping reliefs. The cynics among you will no doubt suggest that it’s no coincidence that the government is “simplifying” at a time when it is more cash strapped than ever.
On the other hand, the TUC’s General Secretary, Brendan Barber expressed concern that this is a means of reducing tax for the rich “while ordinary people see services slashed and VAT increased.”
Reality is probably somewhere in between. As the economy grows, small businesses need all the help they can get and simplification of UK tax rules has to be welcomed.
On the other hand our tax system has evolved to produce specific outcomes. A good example here is R&D tax relief which has helped place Britain at the very cutting edge of pharmaceutical and technological developments.
Every action produces a reaction (let’s not forget that when pension contributions were simplified we found ourselves with 120 pages of legislation following protests against extra tax relief for higher rate tax payers) so it will be interesting to see how simple we can make things or whether simplification serves to muddy the waters yet further.
Watch this space…
As a fan of both sport and tax, I was interested to hear of Usain Bolt’s decision not to compete in the Aviva London Grand Prix. We understand it’s not because he’s scared to face his big rivals, Tyson Gay and Asafa Powell, but wants to avoid the tax burden following the ruling in [André] Agassi v Robinson in 2006.
Agassi decided that sportsmen competing in the UK are liable for a 50% tax rate on appearance fee and a proportion of total worldwide earnings. As Bolt earns a fortune from product endorsements, this means that if he only raced five times this year, HMRC could tax 20% of his total earnings. His appearance fee alone for next month’s Grand Prix is reported to be £166,000 – so we’re talking big money!
The media are currently reporting that Bolt’s decision could affect London 2012, September’s Ryder Cup and England’s bid to host the 2018 FIFA World Cup. Let’s not panic! The government tends to exempt participants in major sporting events, Agassi was decided in 2006 and there has been plenty of world-class sports action in the UK since then.
However, exemptions are often inconsistent and depend on arbitrary judgement of what constitutes a major event. Many big names were missing from the pre-Wimbledon warm-up at Queen’s Club in June and, whilst Tiger teed off at St Andrews today, major names have been conspicuous by their absence at other big events in the UK’s golfing calendar.
As we were once led to believe that the Teenies were to be the decade of sport, the time has come for some clarification. We’ve an Olympics and a Rugby World Cup in the diary already and we’re bidding for the FIFA World Cup in 2018. As UEFA have expressed previous concerns and in the context of the rollercoaster ride that has been our 2018 bid, the whole thing could benefit from clarification from HMRC.
It seems unfair to tax sportspeople who have a unique double identity as sports hero and international brand. Companies compartmentalise worldwide operations by dividing themselves into various legal entities leaving only transfer pricing as an issue.
