E&Y swings axe as VAT advice slumps

Ernst & Young is set to axe 12 people from its indirect tax department,
at a time when VAT practitioners are reeling from the government’s crackdown on
tax avoidance.

The firm said this week that it was in consultation with a small number of
people about the moves, suggesting 12 were likely to be affected.

The job cuts, if implemented, would be surprising given the profession’s
extraordinary growth and
financial strength this year.

Though the firm did not specify the reasons for the move, VAT experts said
that the indirect tax market had been hit by a fall in demand for intricate tax
planning, and been replaced by less lucrative tax risk work.

The redundancy proposals follow a strategic review of the indirect tax team
and will affect employees ranging from administrators to senior managers. ‘Ernst
& Young is currently in consultation with a very small number of people in
our 1,800 strong UK tax practice, who are at risk of redundancy following a
strategic review earlier this year. Around 12 people, based in the indirect tax
team, may be affected,’ the firm said in a statement.

The moves follow a slump in indirect tax across the board. Revenues at the
Big Four have either flattened out or shrunk, prompting firms to reassess their
business plans for indirect tax.

HM Revenue & Customs’ crackdown on
VAT avoidance schemes has
caused the difficulties, a senior Big Four partner said.

‘Clients are more interested in focusing on risks and controls than clever
ideas,’ the partner said.

Companies are also bringing VAT expertise in-house. Tax departments at the
Big Four have broadly weathered the storm of the tax avoidance campaign,
witnessing double digit growth in some areas.

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