Chris Bale of etaxjobs.com predicts that indirect tax professionals are in line for significant pay rises
One might assume that all tax professionals at the same grade and with equivalent ability are paid the same.
In fact this is not always true. Both personal tax and indirect tax specialists often find themselves being paid less than their colleagues in corporate/international tax.
There could be some historical logic behind this pay differential. For example, the profit a Firm will earn from the fees generated by a corporate tax team could well be greater than that those generated by an indirect tax team. One could also argue that it costs more to train a corporate tax specialist than a VAT or Customs specialist. This certainly used to be true when most indirect tax specialists were recruited from HMRC.
At etaxjobs we predict that this is all about to change. We believe that employers, both corporates and accountancy firms, will need to significantly hike up the salaries for indirect tax specialists in the coming years. We justify this claim as follows:
- Brexit has resulted in an increased demand for indirect tax services. Multinationals are already starting to beef up their vat and customs teams in anticipation of a large influx of work. The larger firms have also embarked on recruitment campaigns for experienced indirect tax professionals. So demand is increasing exponentially, but will the supply match this ? The answer is no – there are simply not enough indirect tax professionals working in the UK, nor are there enough graduates in the pipeline. Therefore the pressure on Firms to outbid one another and offer higher salaries will start very soon.
- Brexit will have a secondary impact on the recruitment of indirect tax professionals because it is very likely that EU VAT and customs specialists will stop relocating to the UK to work. Over the past 5 years there has been a steady flow of immigration into the UK by VAT professionals who have pan-European experience and language skills, particularly valuable for multinationals with EMEA tax teams based in the UK. There are also numerous VAT reclaim companies that rely heavily on non-UK staff. Even assuming that all EU VAT specialists currently working in the UK remain, if the flow from EU to UK stops this will increase the difficulty in hiring and add to the upward pressure on remuneration.
- The UAE is currently going through a huge recruitment drive as it introduces VAT. With no local experience, the hiring is focussed on jurisdictions like the UK, Ireland, Australia, Canada and parts of the EU. The opportunity to spend 3-5 years in the Middle East is an attractive proposition for indirect tax specialists and their relocation is leaving behind gaps that are not being easily filled. If the currently nascent in-house indirect tax market kicks off in the UAE over the coming years, then that will further increase the migration.
- Taxologists. If you don’t know what they are this article might be useful. Many think that the future tax professional will be a hybrid role – strong tax technical skills married with technology expertise. What is certain is that VAT specialists are currently being given the option to follow this route. The salaries and bonuses touted already offer a premium over an equivalent, traditional VAT role.
- Customs specialists, much like Transfer Pricing specialists, can pretty much work wherever they please. The global opportunities for anyone with strong customs experience means that they will be difficult to retain and we expect financial incentives to be offered by UK businesses and firms who wish to keep (or attract) this talent during Brexit and beyond.
To summarise: Domestic UK demand outstrips supply and cross-border movement of indirect tax professionals will flow one way only – out of the UK. Both of these factors will lead to an inevitable (and one could argue long-overdue) increase in remuneration for VAT and Customs specialists. The new Taxologist role will become more prevalent and spearhead the rise in value of indirect tax specialists.
I would like to thank Guy Barrand of BLT for reviewing this article prior to publication. The views are my own but I am grateful to Guy for his input.
Chris Bale is CEO of etaxjobs.com, the largest job board globally for tax professionals.