Centres of Excellence
Contributed by Jessica Wilson on 14 January 2015
Over the last 10 years the tax compliance and reporting landscape has shifted dramatically; regulatory pressures on multinationals have grown and revenue authorities are adopting increasingly sophisticated and commercial approaches of monitoring them. Information sharing and cross border collaboration has also become more transparent in a bid to ensure better compliance and improve the profile of tax within the public eye.
The introduction of Big 4 ‘Tax Compliance Centres’, located across the UK, Europe, and as far afield as India, is just one example of systems developed to ensure cost effectiveness and operational efficiencies. However by outsourcing corporate tax compliance, traditionally the mainstay of a newly qualified tax accountant’s training, could this create a skills gap in future generations of young tax professionals?
Big 4 Graduate Training
Historically, corporate tax compliance has played a large part in a newly qualified accountant’s training within the Big 4. Typically this involves substantial CT600 and CT61 work on behalf of clients, whilst senior members of the team concentrate on the more ‘exciting’ or strategic projects. Often not remembered as the most enjoyable aspect of training, this nonetheless provides the foundation from which a successful career as a tax professional can be built, both in practice and in-house.
As a consequence of outsourcing this work, the internal training program for newly qualified tax accountants within the Big 4 has changed dramatically; not only to compensate for the reduced exposure to the compliance process, but more importantly to ensure that future leaders develop the necessary business skills to succeed in practice.
This is both a strategic and a cultural shift, to “create consultants” rather than simply concentrating on the technical aspects of graduate training, as James Wright, International Tax Partner at Deloitte explains: “We made the decision that this method would result in a more well-rounded tax professional – an associate who will be better suited to succeed in business and one that would be able to convert onto a more client facing role at an earlier stage in their development. Having the opportunity to learn through involvement rather than through a text book is vital.”
However, whilst this may offer Big 4 tax graduates greater exposure to senior management, more on the job training and a focus on real issues, does it come at the expense of hands-on tax accounting experience?
As administrators adopt a more focused approach to compliance, technical tax accounting has become more important than ever for businesses with an in-house tax function. A commercial attitude and the ability to succeed in business are just as highly valued in-house as in the Big 4, but with a very different focus.
For in-house tax functions without their own graduate training programs, the natural talent pool is newly qualified tax professionals from the practice firms, and predominately those from the Big 4. However, as the Big 4 reduce precisely the element of their training that is increasingly valuable for in-house tax functions, does this create a skills gap? “There is a risk of this, and it is something I’ve discussed with a few Big 4 partners over the last 3 years” says Glenn Price, Head of Tax at Omnicom, “I’m sure the Big 4 compensate for the graduates who don’t have this foundation, but I’d certainly be concerned about taking advice from any corporate tax manager who hadn’t been responsible for preparing and reviewing a fair amount of tax returns”.
Does this then reduce the marketability of Big 4 graduates who wish to move in-house? Possibly, as according to Price “the accounting and tax experience that my team obtain through preparing tax returns is the foundation of their tax knowledge, and the platform to them starting to give advice. I prefer candidates who are confident in giving advice and have spent at least 6 months working in-house (whether in a full-time role or on secondment) such that they focus on the real risks rather than caveating every single piece of internal advice to the nth degree.”
The rise of the Tier A firms?
The training programmes of the ‘Tier A’ firms, such as Grant Thornton and BDO, still maintain a core focus on compliance obligations and technical tax experience. The in-house tax functions that broaden their catchment area from the traditional talent pools of the Big 4, may find that graduates from the Tier A firms neatly fill the emerging skills gap.
From a candidate perspective, the Tier A firms may also offer graduates a more rounded foundation for a career in-house: “I think compared to my peers in the Big 4 I developed a much broader compliance outlook gaining exposure to other areas of tax such as VAT/PAYE” says Paul Murrell, Tax Manager at BDO, “If I wasn’t as hands-on I wouldn’t be as confident with all the subsequent issues that were thrown at me as I progressed my career. Given the hands-on nature of the program, you also develop a ‘roll your sleeves up’ attitude which I think is vital for when looking to move in-house as this is a highly sought after attribute.”
Looking to the future it is difficult to comment on the consequences of this shift. The development of the Big 4’s training platform is very much geared towards ensuring the softer and more commercial skills of a young tax accountant are developed and enhanced, whilst the Tier A firms continue to adopt a more ”traditional” approach to their training programs. As a result, we may begin to see both of these equally credible talent pools being utilised on the basis of this shift, driven by the nature of the role in question and skill set required.