Shrewd tax strategies can save individuals and companies fortunes. And as CALUM ROBSON finds out, tax advisers are also doing very nicely themselves.
Richard and Judy, Abba's Björn Ulvaeus, U2 and Andre Agassi may not appear to have much in common - yet over the last year, they've all had to rely on their tax advisers to spare them from over-zealous tax authorities, with millions of pounds at stake.
But while high-profile cases can turn their protagonists into celebrities of the accountancy world, it's the tax advisers who quietly arrange financial affairs to prevent lawsuits in the first place that acquire real star value.
Tax affects us all. Arguments over 'stealth taxes', rebates, tax loopholes and Revenue bureaucracy keep our political parties going. The TaxPayers Alliance, a grassroots campaign for lower taxes, has grown from three volunteers in 2004 to over 5,000 passionate supporters today. For many people, tax can be a good thing - with carefully targeted levies in place or proposed to tackle climate change, pollution, road congestion and dwindling energy stocks.
But one of taxation's certainties - besides its capacity to divide, frustrate and fascinate - is that it presents a host of opportunities for smart accountants to carve out fruitful careers.
Stay ahead in the game
The traditional role of tax accountants was for many decades to ensure that their clients didn't fall foul of tax laws when keeping accounting records. But with tax burdens increasing - not to mention the amount of red tape to tangle with - those with a more forward-thinking approach are favoured.
'Employers desperately need tax strategists,' says Steve Carter of financial recruiters Nigel Lynn. 'Organisations are all looking closely at how their financial structures might minimise their liabilities, as tax is becoming more complex. Strategy is regarded as more critical than compliance, which is important but somewhat after the event. The candidates employers are crying out for are those who can advise on how to stay ahead in the cat-and-mouse game with the Revenue.'
The prospect of devising creative strategies for her clients prompted Judith Hodge, who works at Deloitte, to switch from audit to tax just six months before her ICAEW finals: 'Completing returns accurately and on time is just one side of tax,' she says. 'What's more interesting is the consultative role we play. Clients are always looking for the most tax-efficient way to arrange their affairs, and as tax rules change a lot, there's a constant challenge.'
Hodge represents a generation of advisers who Carter believes have brought a refreshingly entrepreneurial approach to tax: 'The instinctive reaction of tax accountants was for a long time too conservative,' he explains. 'They wanted to arrange things neatly and tidily so as not to aggravate the taxman. But now you have all these new people coming through the ranks who're thinking outside the box - they want to devise ways of achieving big savings within the remit of law.'
Globalisation has presented huge challenges to conventional thinking about tax: 'Companies are far more inclined to consider relocating to advantageous tax environments, or conducting certain transactions in different jurisdictions,' says Carter. 'Good tax advisers should therefore not just be looking at domestic operations - they need to have the foresight to see emerging markets and identify potential for re-organising their clients' finances so that they still meet their tax liabilities but in a more effective manner.'
Taking foreign tax regimes into account was part of the appeal for Hodge: 'I work in corporate tax, so we have to look at issues such as proposed acquisitions of property or companies overseas and consider all the different taxes that might be involved,' she says. 'You have to think not just about UK corporate tax, vat and stamp duty - but also the various overseas tax systems, which are also continually evolving.'
No experience, no matter
While few tax accountants will end up rescuing musicians or media names from the clutches of the taxman, their knowledge and insight will nevertheless be sought and embraced by household names - blue chip organisations driven by the need to increase shareholder value.
And a lack of basic tax training (other than as part of accountancy exam syllabus) is no barrier to entry, even within the Big 4. 'There are so many different flavours of tax work that the large firms engage in - reporting, investigatory, remedial and strategically proactive - that they can't rely only on those who have trained in tax from the beginning of their careers,' says Carter. 'Talented people who have trained primarily in audit or accounts will have plenty of opportunity to cross over and they'll enjoy superb training.
'Most SMEs, while having finance functions, won't have their own tax specialist - they outsource that work to small firms, who tend to be regarded as experts in small business or personal tax. So there are opportunities outside the Big 4 too.'
Hodge started her accountancy training in audit - but felt something was missing: 'I'd always liked the sound of tax, and decided it would be more challenging - and technically more interesting,' she says. 'Plus, what I really get job satisfaction from is acting as an adviser and helping my clients by adding value.'
She feels fortunate that she was able to make the transition internally within Deloitte: 'It was a brand new job with new people, new clients and new issues,' she says. 'But by still working for the same firm, I didn't have that feeling of being a total new girl on day one. And I was sent on plenty of internal training courses to help me get up to speed, which was immensely helpful.'
However, having an audit background had its advantages: 'I realised not long after starting that I had a stronger skill set for dealing with clients and knowing where they were coming from,' says Hodge. 'When you train in tax, you're initially more office-based and less client-facing - so that was experience I was able to bring with me.'
An increasing reliance on fees from tax work has propelled tax advisers into the front line in the profession: 'Because companies have to divorce their advisory and compliance work, tax has taken on the mantle of the consultative end of the business and enjoys a high profile compared to regulation and compliance areas,' says Steve Carter. 'Companies now tend to choose their professional services advisers based on their reputation in tax - they want people who are experts in planning strategically to save money. And outstanding individuals are more highly valued than their contemporaries outside tax because their work has the ability to attract clients to the firm. Partnership prospects are excellent.
The route to industry
In profit-making organisations, tax types are equally in vogue - and the number of in-house tax jobs in finance departments has burgeoned in recent years. 'Most people used to imagine tax accountants as academic types sitting by themselves in the corner and reading big fat books on tax,' says Carter. 'The reality is totally different. They're involved in front-end processes and strategy, and have become integral members of the finance team, working closely with senior management.
'The majority of people coming into tax see it as a fantastic grounding in business, as they have to look at every moving part of an organisation. Tax is often regarded as a building block to a business career, not a destination in itself. There are far more directors and heads of tax occupying senior and well-respected positions in large companies, and they're dynamic and highly commercial people.'
While more mainstream financial activities such as audit and bookkeeping are focused on recording and measuring, in-house tax teams have ample opportunity to add value.
'It's easy for them to demonstrate good performance,' says Carter. 'They can point to the accounts and identify where they've driven thousands of pounds onto the bottom line - and that's great for them, as it's something a board of directors will recognise and reward.'
Qualified for success
The Chartered Institute of Taxation offers a range of professional qualifications, with chartered tax adviser (CTA) status regarded as its gold standard. But shouldn't CA, ACA or ACCA be enough, especially with continuing professional development (CPD) requirements?
'That's the $64,000 question,' says Carter. 'Once you're working, your experience is going to come first and foremost in the pecking order for most employers. But CTA has a degree of worthwhile validation, in that it gives you more technical know-how and keeps you regularly updated. So it's a significant add-on and differentiates you from the rest of the field.
'Tax is a moving feast - even by undertaking CPD activity, chartereds and certifieds will only be up to date to a point - they won't have the same depth. So candidates should promote their CTA status more to prospective employers - and it's something for which employers should really give more credit.'
For Hodge, pursuit of a tax-specific qualification was essential: 'I was a little nervous about not having trained in tax from the beginning, which is why I chose to do CIOT exams,' she explains. 'It was incredibly helpful and gave me much more confidence, even without the same initial two-and-a-half years practical training that my peers had. Becoming a chartered tax adviser is such a benefit work-wise; I'd recommend it to anyone who's transferring from audit.'
Carter predicts that life in the tax world can only get rosier: 'People who can develop that ability to unravel the complexities of tax and capitalise on opportunities to reduce liabilities - whether for their clients or their own employer - are going to have a stronger advantage in the jobs market.
'Tax is a given,' he concludes. 'It'll always be there, whether you're an employee, rock star, family business or multinational corporation. And everyone wants to pay less tax. Help them to do that and you're in business.'
