Tax has been a high profile topic in the press recently and an interesting underlying theme has been the reputation of tax professionals in the private sector.

The Chief Political Commentator of the Telegraph, Peter Osborne, recently wrote one of the most damning verdicts. He stated ‘there are few more worthless specimens of humanity than tax accountants and tax lawyers’.

Anthony Thomas, President of the CIOT, leapt to defence, arguing that the majority of media comment was ‘ill-informed, ill-conceived, ill-thought out’.

The widespread public disapproval of tax avoidance by multinational organisations has resulted in a conscious effort by those in the profession to improve public image.

Mark Robertson, representing the investment research service Eiris, highlighted how ‘significant reputational damage in the form of negative publicity arising from aggressive tax evasion’ can create financial risks for organizations. Joe Stead from Christian Aid noted that ‘becoming known as a tax dodger can damage a company’s reputation and lead to costly penalties’.

So, what can tax professionals learn from recent articles in the press? It would seem that the greater public has focused more on tax avoidance schemes in general than individuals’ actions and there are a variety of motives behind the most negative comments. Tax professionals will have to continue to be conscious of heightened scrutiny and the impact of their reputation on the business as a whole.

Guest blogger

Beth Horne, Candidate Manager, Morgan McKinley Taxation

Peter Osborne, reputation, Tax Avoidance, Tax Evasion, Tax Professionals, Taxation

However we choose to look at the specifics, this year’s budget is a PR gamble for the government.

With many of my clients being financial institutions, or constituents of the FTSE 100 I have a particular interest on how today’s changes will be viewed by big business and on high earners within these organisations. Is Britain, as the Chancellor proudly declared, ‘open for business’ or will we see high earners move away from the UK?

It’s an interesting one. In many respects, the UK still offers much to large corporations which is why we continue to see many businesses trading here. However, the ongoing furore over banker’s bonuses has led to some, including a Senior Executive at a Wall Street Bank to describe London as ‘the worst major City in the world to do business’.

Let’s imagine that bonus payments were no longer discussed in the media. We live in a world where individuals decide to work in a location purely based on the tax implications of doing so. By looking at today’s budget, has George Osborne done enough to ensure that, on paper, we have a viable and attractive tax system?

We have heard terms being used lately such as ‘tycoon tax’ and ‘mansion tax’ which imply that the wealthy should be penalised for being financially secure. Given that the top 1% of earners already pays 27.7% of all tax (ONS – 2011/ 2012); I believe that for the economy to prosper we need to welcome big business and their employees to this country.

After months of speculation the 50p top tax rate  will be reduced to 45p from next year. It is widely accepted that it actually brought in little revenue and maybe acted as a deterrent in attracting or keeping – top talent to the UK. However, scrapping it is a high profile move and the Chancellor has ensured that the rich are taxed in other ways including the reduction in tax relief on pensions, the so-called Mansion Tax (taxing properties over £2m), the Tycoon Tax (forcing all tax payers to pay a minimum of 20% on all sources of income) and through the expected closing of loopholes to clamp down on tax avoidance.

So, what have we seen today? Has the government played the PR game and given gimmicky names to serious tax issues to appease their voters; whilst trying to do the same with high earners by reducing the highest tax rate?

It is very difficult at this point to predict if the above steps will improve the economy. I am concerned that over time, we will become a country that welcomes big business (the reduction in corporation tax from 25% to 22% over the next 2 years appears to give this impression) but not those who work for these organisations.

Like it or not, we live in a capitalist society; an advanced one at that. By definition, capitalism creates competitive markets and in these markets some will fair better than others. For this system to continue effectively, we need to ensure that everybody is treated fairly, with respect and not as a pawn in an elaborate political game.

budget, budget 2012, corporation tax, George Osborne, tax implications, tax issues, tax system

A recent article that I read talked about employers being warned about not putting too much trust in using social media, to solely recruit for new employees into their businesses.

The findings of this article stated that 57% of employers are searching for potential candidates on sites such as LinkedIn .  However only 5% of those individuals surveyed would actually hire individuals from these social networking sites.  In comparison to this, 19% of respondents said that they would hire primarily from recruitment consultancies with 76% preferring to use a specialist agency.

These are very interesting findings which will lead me to believe that whilst these sites are fantastic in terms of building your network of contacts and profile, they are limited in terms of ensuring that you are using a multi-layered approach to find the best talent in the market place.

Many of our clients will rely on us to use this approach to find their new employees and whilst we will use social networking to headhunt and source candidates, we will still use many other mediums, particularly focussing our efforts on referrals and recommendations to our business.  Our clients will also be very reliant on the fact that we will have met candidates sent to meet them face to face, that all will be fully referenced and this then in turn still highlights the importance of specialised recruitment consultancies.

To view in full, please click here

No tags

A fair tax system. You decide?

I read City AM’s headline with interest today – “67,700,000,000 – The amount of tax paid by Britain’s top 100 companies last year”.

Alongside the new stories about companies and individuals who “avoid” paying the maximum tax (see the headlines about Ken Livingstone avoiding PAYE by paying consultancy fees into a company, thereby paying the lower rate of corporation tax and the headlines about Barclay’s being ordered to pay an extra £500 million to HMRC) City AM reports that big companies paid an extra 14% more compared to the previous year.

The figures were released by PwC today but City AM makes the point that the Treasury is attempting to show the public that it’s not letting big business get away with avoiding paying tax.  Critically, David Gauke MP (Treasury Minister) argues that businesses must “demonstrate just how critical (their) success is to the prosperity of individuals and families across the economy”.  Very simply, the better our business do, the more tax they pay the better off the country is!

There are daily “name and shame” stories about how “over paid” various individuals are and this fuels the flames of anti-business sentiment.   There was an interesting article in the Evening Standard yesterday with Sam Leith offering the opinion that Ken Livingstone’s payment to his company rather than as an employee was a deliberate strategy to align himself with London’s business community – Leith says “In avoiding tax this way – and to hell with the potential unpopularity – he goes a mile in their shoes. He is putting his money where his mouth will follow”.  An interesting theory!! Read the full article here.

Whilst change is unavoidable – maybe too much reward is given to individuals in senior positions across the private and public sector for very little success, I do think that we should be championing UK businesses (of every size) to keep the wheels of the economy turning, generate more taxes and lower the country’s deficit.

I noted with interest that the HMRC would be appointing a new tax “assurance commissioner” to broker tax agreements and settlements with large groups – hopefully this will help co-ordinate such arrangements and ensure a fairer, more transparent system will be realised.

Am I being an idealist?  Am I over simplifying this?  I am deliberately not getting into how the taxes are actually spent (that’s a different debate) or perhaps you think that bigger businesses should pay more tax – especially if they are posting record results??  What do you think?  Join the debate!!

corporation tax, PAYE, 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

Allister Heath, cross-border currency transactions, financial transactions tax, James Tobin, robin hood, Tax, Tobin 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.

Accounting, accounting salaries, business support salaries, Finance & Support Salary Survey 2012, finance salaries, office support, salary survey 2012, secretarial salaries, UK salaries 2012

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

No tags

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!

cv, moving from practice to in-house, Tax

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.

ferrari, Tax, vehicle tax

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.

Morgan McKinley, Tax, VAT