UK tax advisory market set to grow in 2019

UK tax advisory market set to grow in 2019

Source Global Research has today revealed that the UK’s tax advisory sector could grow fastest in Europe

2019 may herald a period of change as the UK prepares its exit from the EU, but research and strategy firm, Source Global Research, has today revealed that the UK tax advisory market is set to grow faster than any other European country this year.

On a global scale, tax advisory revenues have grown by $5bn in a three-year period (2014 to 2017).

It is surprising, then, that the tax advisory sector is seen to “lag behind” when it comes to market size, despite the fact that it is clearly “[packing] a punch” around the globe.

Source Global Research stated: “Although the UK tax advisory market expanded at a slightly slower rate of 7% to $2.2bn in 2017, once the details of the UK’s exit from the EU become clear in 2019, growth is estimated to almost double to 13% as Brexit-related work will drive strong levels of growth.”

Of course, it is important to note that this growth prediction does hinge of the eventual terms agreed between the UK and the EU—should these be clearly outlined before the deadline.

According to the firm, the main global tax advisory services are as follows:

  • Business tax management: $9.27bn
  • Transfer pricing: $5.18bn
  • International tax: “$1.58bn

“With decisions about tax increasingly becoming enmeshed with wider business decisions, firms need to be able to provide multidisciplinary offerings that integrate tax decisions with other key areas, such as risk and audit – even business consulting services – putting the Big Four in a strong position with clients,” said Fiona Czerniawska, director at Source Global Research.

Unsurprisingly the financial services sector, as a whole, makes up a huge percentage of the world’s advisory market, at almost a third. It is the largest sector for global tax work, valued at $6.64bn.

Czerniawska continued: “Deciding where to manufacture, hold intellectual properly rights, or locate head office functions are all increasingly becoming as much of a tax decision as a business one. This illustrates why Brexit will lead to an increase in tax advisory work.”

The firm’s report highlighted that the Big Four are controlling 87% of the market share—an unsurprising statistic when considering the controversy around this area, and the recent CMA report. Of the Big Four, EY “leads the pack” with 35% if the global revenues.

Source Global Research has also reported the following:

  • There is an increasingly complex tax landscape forming. An example of this is the significant changes to taxation – to allow for a boost in investment – made by the likes of the US and Belgium.
  • There is a growing global appetite for the development and implementation of automation. Big clients are proving to be very enthusiastic about the process of automating tax processes. 82% of those who took part in a recent Source Global Research survey admitted that at least “some” tax functions would be automated in the next decade.
  • The importance of “managing tax-related reputational risk” has made itself known, thus there is a “convergence between tax and risk issues.”

“Everybody knows that machine learning through to full AI is going to change tax significantly,” Francesca Lagerberg, global leader of tax services at Grant Thornton, argued.

“However, governments are moving quicker on this than the private sector. The reason governments are going digital before their customers is primarily financially driven, as they can’t afford to run big revenue-collecting alternatives. Digital is cheaper, quicker, and – equally important – it can be more efficient.”

As the tax advisory space is constantly evolving, it will be one of the main markets to see some of the strongest growth by the end of 2019.

Source Global Research has forecast a growth of 11% by the end of this year—this “will increase the value of the global tax advisory market to $24.4bn by the end of 2019.”

 

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