The Big Four made a fortune from the merger and acquisition boom that began
in the 1990s.
Revenues from takeovers grew sharply and their M&A departments ballooned
in size as they hired more staff to advise multinational clients on
But in 2008 when the global economic slowdown caused the M&A market to
seize up, the big accountants were hit hard and began a wave of redundancies.
Takeover advisers were among the first in line for a P45. Companies making a
loss normally put takeovers on hold.
Now, it seems that the jobs of tax advisers are at risk after
KPMG last week announced
that it would cut jobs in its UK tax business due to a fall in demand for tax
work relating to M&As.
The world’s third biggest accountancy firm has not said how many jobs it
plans to cut, but an industry source said about 200 jobs could go. KPMG had
hoped to cut costs and avoid further job cuts by allowing staff sign up for a
four-day working week in a scheme announced earlier this year.
But the picture across the tax sector is not all bad. In KPMG’s tax
department, for example, there is strong growth in tax-advice relating to
pensions, indirect tax and corporate regulations and transfer pricing
Recent changes to pensions, such as the restriction to the availability of tax
relief on pension contributions, have created more demand for corporate tax
advice. The cut in the UK VAT rate to 15% in 2008 has also fuelled demand for
Tax experts say that large companies can save large amounts just by claiming
the maximum possible VAT refunds.
Gary Harley, global head of indirect tax at KPMG in the UK says that one
large telecoms company has been able to reclaim more than £20m in indirect tax
refunds and made a ‘permanent cash flow benefit’ of more than £102m through
improved organisation of its indirect tax affairs.
But will a growth in VAT and pension advice be enough to offset slower growth
in M&A services? Anecdotal evidence suggests that some firms are cutting tax
jobs but not a large number at one time.
Firms remain tight-lipped about where the axe will fall next. Asked about
whether it planned to cut jobs in its tax department in response to a slowdown
in business, a spokeswoman for PricewaterhouseCoopers said only: ‘The
environment remains challenging and we are keeping our resource plans across our
businesses under review.’
Does Darwin's theory apply to taxation? Colin ponders...
The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states