Cost of the tax function versus tax liability

In their recent tax review Ernst and Young explore the question of whether corporates should be looking hard at the cost of the tax function or the tax cost of the business.

Cost of the Tax Function

For a large number of organizations, this year has brought significant headcount reductions within Group functions. However, does it make sense for companies to adopt this strategy within tax? Definitely not - but why is this the case?

• EY identify that, in the world’s largest businesses, 50% have less than 25 people in the tax department globally. This is a very small number when we are talking about a corporate tax liability that is approximately one third of profits.
• Tax departments traditionally rely on colleagues within the finance function to assist with compliance and tax reporting. With a shrinking finance function it is likely that the tax department will become increasingly stretched.

Reducing the Tax Cost

The tax function can lower the tax cost and thus generate cash by reducing or deferring taxable income and by increasing or accelerating deductions. Anti-avoidance legislation means that all tax planning requires a valid commercial rationale. As a result of the economic conditions, corporates are undergoing restructurings and reorganisations that provide significant opportunities for tax planning. EY also point out that tax authorities around the globe are reforming tax laws in light of the global recession.

Surely all this means that the tax department will be even more stretched in months to come?

The Interim Solution

We are in a position where the tax function is under increasing pressure and yet is often unable to recruit the resource it needs.

Maven Partners believe that we will see an increased demand for experienced tax interim professionals who can come in and add value to the cash tax position of the company.

Mary Driscoll is Head of the Interim Practice at Maven Partners.

marydriscoll@mavenpartners.co.uk

+44 (0)207 061 6420

Rob Stephenson is Head of the Tax Recruitment Practice at Maven Partners.

robstephenson@mavenpartners.co.uk

+44 (0)207 061 6421

Thinking about Interim Management?

As we all know, the current recruitment climate is pretty challenging in most areas. The Chartered Institute of People Development (CIPD) predicts that around 600,000 people in the UK will be made redundant in 2009. As a significant number of these positions have been and will be within finance and tax, lots of professionals are considering a move to interim management. This decision shouldn’t be taken lightly and there are a few factors that should be taken into account. Of course, there is a huge difference between making the decision to become a “career interim” and taking a temporary position to bridge a gap. True senior level interim positions make high demands on the individual and often only work well for people that have actually made that career choice.

The employer’s point of view

Employers look favorably on professionals who have a demonstrable track record of working on similar interim projects, and who have a broad range of experience within different organisations. It often isn’t as simple as just deciding to do it, your timing within your career can be crucial.

The whole interim psyche is different and the way of working takes some getting used to. For this reason, one of the biggest challenges within an interim manager’s career can be getting the first assignment under the belt, as employers want to be sure that the person they take on understands this. With the market being flooded with people at the moment, this can only be harder.

The level of pressure on an interim manager working in any area of a business goes hand in hand with the pressure on an organisation to perform and deliver results. In finance, you are likely to feel that pressure even more at the moment. As an interim manager you need to be able to deliver results and most importantly demonstrate added value, fast.

If companies are taking on non-permanent members of staff then it is likely that there is a specific project to complete. There will always be an expectation for the interim to complete the project with efficiency. In a downturn there will be even higher expectations on delivery.

What questions should you ask yourself?

To decide if you are suitable for interim management roles it would be wise to answer the following questions:

• In the event that it takes a while to secure my first interim position, do I have enough financial stability?
• Would I be comfortable perhaps working on only part of a project and not seeing the actual results?
• Can I quickly understand what is required of me and therefore plan and execute my work with minimal input?
• Would I enjoy an environment where I am removed from company politics?
• Would I be happy in a company, knowing my end date?
• Do I have enough experience within different organisations to stand out above my competition?
• Does my family situation allow me to be flexible with the location of roles e.g. can I live away during the week and return at weekends?

If you are happy with your answers to these questions then seek advice from your peers, industry professionals and friends to gain all of the information that is available to you. When a career in interim management works for the right individual, it works very well. Prior to any meetings, think about your skills in relation to what the market may demand currently and create your own proposition, rather than cramming every bit of experience onto your CV.

Remember - it is as important to impress your chosen recruitment partners as it is clients as there are numerous high quality applicants for every role at the moment.

Mary Driscoll is a Managing Partner at Maven Partners, a specialist Interim Management and Temporary Recruitment business.

marydriscoll@mavenpartners.co.uk

Temporary recruitment - how should temporary workers operate with agencies in a downturn?

So many people I am meeting at the moment feel badly treated by the agencies they are using and have used for a number of years. We all know about the recession but it seems that morale is getting so low in some recruitment businesses that it is affecting how they interact with the people who are the key to their success – candidates! The individuals feeling this most are temporary workers who up until relatively recently have been operating in a market where they can be selective about the role they take, push up rates and reject an offer for a company that means an extra 10 minutes on the journey time to work.

Times Have Changed

Everyone has benefitted from the temporary recruitment market in the last few years, candidates and recruiters alike. However, times have changed and it is down to both sides to alter the way in which they operate. As a candidate you can’t expect to be being called frequently with numerous options. If your agencies are calling you to stay in touch or update with you then don’t get annoyed with them – believe me, this is good treatment! Often people are not being contacted at all. Establish who will be calling who and how often. Ask questions of the consultants you are dealing with. How can I improve my CV? Is there anything I should be doing at the moment to improve my chances of finding a role? Which skill sets are in demand at the moment? Is there anything I can do to improve my interview technique? How often will you call me, or should I call you? If you see roles being advertised, call your consultant and ask if they know anyone at that organization in case they can get straight to the decision maker and apply on your behalf.

Proactivity will be rewarded

In the current temporary recruitment market candidates need to be more proactive in their job searches and aim to build better relationships with good recruiters. They are there to be trusted advisors and experts in what they do - test them.

Mary Driscoll is a Managing Partner at Maven Partners, a specialist Interim Management and Temporary Recruitment business.

marydriscoll@mavenpartners.co.uk