Tax Recruitment

Tax Recruitment

Boomtown Tax

MIKE TRUMAN looks at the current state of the tax recruitment market.

WE'RE NOT PROUD. We know that many of you read Taxation from the back forwards, starting with the job ads, and only reluctantly settling down to read 'the leading authority on tax law, practice and administration'. Traditionally, recruitment has rarely made it to the front half of the magazine. But if we have a brief to cover tax practice, surely we should occasionally interpret that brief more widely, and look at non-technical aspects of tax, such as recruitment — particularly since the past few years have been such a roller-coaster?

Hard times

Recruitment consultants who specialise in tax agree about two things. First, in the late 1990s, the market was very bullish. Second, by mid 2002 it had fallen off a cliff. Chris Nelson, of Pure Recruitment (www.purerecruitment.com) says that 'by the summer [of 2002] activity levels were at 20% of those a year earlier'.

There is less agreement on pin-pointing exactly where the wheels fell off. It is tempting to put it all down to 9/11, but there were straws in the wind before that. Matthew Phelps, of Brewer Morris (www.brewermorris.com), says that 'in Spring 2001 it became clearly evident that the seven-year boom was decelerating rapidly. The tax industry was already suffering well before the tragic events of September 11th'. On the other hand, Chris Nelson says that one Big 4 firm was still looking to hire 280 experienced tax people at one point during 2001. Before 9/11, it seems the best description is that of Mike Beament, from BLT (www.blt.co.uk), who says that 'since 2000 the market has been patchy, to say the least'.

On the street again

Post 9/11, the deterioration quickly gathered momentum. Steve Skeates, of Integral Search & Selection (www.integralsearch.co.uk) says 'we witnessed a number of large scale redundancy programs across the Big 4 firms, typically losing 10-15% from their headcount'. Matthew Phelps comments that this shows how dependent the tax industry is on the economic cycle:

The cutbacks hit the corporate sector too, with freezes on recruitment. 'This market is job-driven,' says Matthew Phelps, 'and there is quite literally nowhere to go. Consequently the vast majority of tax professionals tend to remain in their current roles — meaning the market enters a period of stasis'.

Please don't go

The market picked up slowly in 2003, but the rate of pick-up has increased significantly in 2004, creating skill shortages and bottle-necks. One Big 4 firm reputedly made about 3,500 job offers over the past twelve months, of which a large proportion were accepted. Another made just under a hundred in a week recently. This is over the whole of their businesses, not just tax, but tax has certainly attracted its fair share of them. 'The big firms are looking to replenish their numbers, with multiple hires being made at all levels of seniority', says Steve Skeates.

The shortage of candidates is partly a function of the Big 4's difficulty in attracting a high graduate intake in the late 90s, when banking and dotcom businesses were more attractive, and then in recent years when they had slashed their intake in any case. 'They largely ignored the lessons of the 1990-94 recession', says Matthew Phelps. 'The only way to manage profit expectations in the partnership model seems to be by cutting staff. However, the market tends to recover very quickly, and a black hole emerges.'

As a result, there are far fewer newly-qualified ACA or CTA tax practitioners around just at a time when they are in high demand. All the recruitment consultants confirmed that one of the major areas of shortage is 0-3 year post-qualification tax practitioners.

Below the Big 4, anecdotally it appears that the Group A firms may have weathered the storm slightly better, staying truer to their graduate recruitment programs. Their main aim now is to protect what they have — not just the newly-qualifieds, but also the senior staff that joined them from the Big 4. Steve Skeates thinks that 'the post-Enron, Sarbanes-Oxley environment gives Group A firms a much greater opportunity to go after FTSE company tax work'.

Give us the money

There is movement in commerce too, particularly in the current regulatory environment. 'Corporate profits and the burden of legislation particularly in the regulated industries make having a full service tax department almost an economic necessity', says Mike Beament. Matthew Phelps agrees. 'Relaxation of headcount freezes is allowing many organisations to recruit once more — although the majority of the activity is confined to the 1-4 years qualified band.'

Chris Nelson says that 'the Big 4 and the Top 20 are losing good people from newly qualified to senior manager into these organisations. Given the cutbacks of earlier years, they are now resource constrained'.

On that basis, it is no surprise that corporate tax in particular is an area where all the recruitment consultants said there was very high demand. 'A good candidate — redbrick university, Big 4 trained, with first time passes — looking for promotion to manager has a very good choice of firms and will potentially be offered a very attractive salary package', says Steve Skeates.

Looking after No 1

'There is also a steady requirement for investigations staff', says Mike Beament, 'and transfer pricing is a busy area'. In terms of seniority level, in addition to the newly qualfieds, he sees a demand for 'Manager plus' roles. Both Mike Beament and Matthew Phelps stress the demand for partner and director level candidates who either have a client following, or strong business contacts and a nose for generating fee income. High calibre VAT specialists are also in short supply.

Regionally there is — as ever — most demand in London and the South-East. However, all the agencies point out the growing strength of the major regional centres. 'For example, Cambridge has expanded rapidly over the last five years', says Steve Skeates, 'and Leeds and Birmingham are continually growing, offering excellent quality work'.

Don't like Mondays?

There is general agreement on the prospects for the future: barring any major unforeseen influences, the market will continue to be one where demand levels will remain high, outstripping supply. The result should be that salaries will continue to be competitive, and therefore that employees dissatisfied with their current roles will find that they have a lot of choice on offer.

Rather than ask the agencies for a simple estimate of salary levels by role and geographical area, we thought it might be more useful to present them with four mini-case-studies overleaf. We asked what advice they would give to each of our candidates, and what salary they could expect to achieve. These are necessarily general answers, and the consultants stressed that salary levels could vary very significantly. Each case study is followed by an answer which is a composite of the replies received, and then by a few specific comments made from some of the consultants.

Abigail

Abigail has recently completed her ACA training contract in the corporate tax department of a Big 4 firm in Manchester. Her firm is offering her the prospect of CTA training with study leave, etc. and the prospect of becoming a manager shortly afterwards. However, she wonders if her career prospects would be even better in London.

She wants to stay in the North-West, she would probably be best accepting the route to manager offered by her current firm. However, a move south will increase her remuneration, and would allow her to move into a more specialist role if she wanted to. The standard of corporate work in a Big 4 firm in Manchester is high, and if she does not want to specialise then the main difference in moving to London may be the scale rather than the quality of the work — is she attracted by the idea of working on large-scale projects?

Alternatively she could consider a move into industry. There would be a number of vacancies in the North-West that she could consider, but again the choice is greater in the south. Salary in London would be £40,000, perhaps a little more; if she stays in the North West perhaps £32,000-£35,000.

'If she really enjoys working for her present practice, it could of course be possible for her to transfer to her Big 4 firm's London office and move into a more specialist role if anything appealed to her.' Mike Beament

'Ask about a move internally to the firm's London office first. If not, we could arrange two or three interviews in London and she could make her own comparisons.' Steve Skeates

David

David is ex-Revenue, now working as an assistant manager in a mixed tax department of a five-partner London firm. He is not qualified but has ten years of experience in tax, five of them in the profession. He wants to do something 'different' but doesn't know what. He is looking both for a job and for advice on whether to qualify as a CTA to improve his prospects.

It is probably fair to say that David attracted the least enthusiasm from recruitment consultancies. Mostly, they thought that CTA training was a good idea, but wanted him to spend some time talking to an agency first about his aims and ambitions. Underlying this seems to be the question of why he is still where he is after ten years in tax and five in the profession. He should be looking for around £35,000, but it depends on whether he wants to do something mainstream or rather more unusual.

'If he wants to use his tax knowledge in a different environment, he should try recruitment consultancy.' Chris Nelson

'If David has confidence and is looking for more job satisfaction then with lateral thought and the right agency behind him he should find new challenges.' Matthew Phelps

Leah

Leah works in the corporate tax department of a London 'Group A' firm as a tax senior, having recently passed her CTA exams. Although she has dealt mostly with direct taxes so far, she has had some exposure to VAT work, and would now like to specialise in that area.

By contrast, Leah was one of the easiest candidates to help. The majority view was that the first step should be to find out whether she could move to VAT within her own firm, and that there was a high likelihood that she could because virtually all large firms are suffering from a shortage of VAT specialists. If that were not possible (and perhaps even if it was), a Big 4 firm was seen as a good prospect for her, because of the greater range of work that it could offer. If she intended to move into industry in due course, then a Big 4 firm was definitely seen as a good move, to get experience in larger plc work. Salary would probably be a few thousand either side of £40,000, but she might need to accept little or no increase — perhaps even a small step backwards — temporarily if she wanted to move fully into VAT, since she would effectively be retraining as a VAT consultant.

'The way forward, perhaps, would be to find a role that would utilise her corporate tax experience whilst incorporating a healthy dose of VAT to add interest/practical experience — such a role is more likely in industry.' Guy Barrand (BLT)

Sajid

Sajid is a manager in the personal tax department of a fifteen-partner firm in Birmingham. He is CTA qualified with five years PQE, and specialises in high-earning sportspeople and entertainers, for which the firm has a well-deserved reputation locally. He cannot see any immediate prospect of partnership in the firm because it is not growing. He would like to stay in the Midlands.

There will only be a few firms in the Birmingham area that are likely to offer the specialist work that Sajid is experienced in. A recruitment consultancy can help him to explore these options. The other local option would be a move into one of the Big 4 local offices. Alternatively he might move to a specialist firm in London, at least for a few years, which would improve his experience and technical expertise. He could then keep his eyes open for a partnership opportunity back in the Midlands.

His current salary level would probably be under £35,000. A move to a Big 4 firm might increase that to £38,000, but a move to London could increase it much more substantially — perhaps even up to £50,000.

'Sajid needs to decide if he wants to specialise in advice to sportspeople and entertainers. If he does, then a move to London to one of the niche firms that specialise in this area would not only advance his career but give him the opportunity to specialise in his favoured area.' Chris Nelson

Issue: 3982 / Categories: