IT HAS BEEN evident in businesses of all sizes for some time, but a dearth of VAT expertise could be occurring in accountancy practice as well.
KPMG produced a report in March this year illustrating that companies often lack information on their VAT liabilities. It showed that 26% of businesses surveyed have no full-time equivalent VAT specialists, while 59% employed less than ten, with just 33% of firms employing a regional head of VAT.
Just shy of three months later, a speaker from an accounting firm at the ICAEW’s practice conference was – as an aside to a discussion on punching above its weight – speaking of a “national shortage” of specialists. He added – perhaps tongue-in-cheek – that he would be keen to hear from anyone who knew of available VAT experts.
Joke or not, he had a serious point. VAT is an area that, due to its huge amount of intricacies, often leads to companies either overpaying or underpaying, and can potentially become an unseen expense.
At a time when the government is attempting to bring in more VAT levies – albeit controversial charges which have since been rescinded or watered down – to service the deficit, one would assume it is as good a time as any to be a VAT expert.
Why, then, are comments such as the one at the ICAEW conference being made? And why are firms entering into partnerships with VAT specialists rather than recruiting themselves?
The answer is most VAT specialists qualify through one of the Big Four firms, where the emphasis is on processes and support is provided in-house. Inevitably, many of the best are retained by the Big Four and there is little or no trickle-down to smaller firms.
As such, firms are outsourcing or entering into partnerships with people or businesses specialising in VAT.
David Moll is one such specialist, providing VAT services to various small accountancy firms with his firm DKS. For him, one of the reasons that firms are making do without VAT specialists is not just their gravitation towards the Big Four, but the relatively high salaries they command, which mid- and bottom-tier firms struggle to justify.
The pool to draw from is small, too, and as such the VAT function is often soaked up into the jobs of other tax officers.
Those views are echoed by Ian Barker, UK lead of Hays Taxation. There has been a surge of demand over the last eight to ten months for VAT experts in practice, he claims.
The problem, then, is that many firms simply cannot meet the demand for VAT expertise when it surges in the manner of which Barker speaks.
The result is a significant discrepancy which shows little sign of abating, but with VAT likely to remain one of the methods, the government will continue to look to as a way to service the deficit, it will be an area of much interest for some time to come.
So the advice to accountancy students is that VAT is an underserved area, and one that – given VAT’s ubiquity – could hold a fruitful career if you can accept the narrow nature of the area.
Freelancers and micro-businesses still need more information about the government’s plans to make tax digital
New dividend tax is an attack on small business owners and is acting against the best interests of the UK economy, warns Top 50 accountants, Bishop Fleming
The Treasury is consulting on how businesses remunerate their staff to assess whether companies are artificially using benefits in kind to avoid tax
HMRC is consulting on proposals to clarify the tax treatments of general and limited partnerships