Time to invest in your in-house tax team
Ektaa Kumar, Head of Tax Interim at Morgan McKinley, explains why more businesses are now bringing their tax functions in-house, creating a demand for specialists with real commercial acumen.
Government legislation requires all large businesses to publish their tax strategy. Companies need to respond in a clear and thoughtful way, bearing in mind that the audience of stakeholders is wider than before: not only tax authorities and governments, but regulators, investors, non-governmental organisations, media and general public.
With the need for more robust risk control frameworks around tax, it is important for tax to partner with the business. Companies must look not only for technical expertise, but also for strong commercial acumen and understanding.
In the current economic climate, the tax outsourcing model is expensive for many businesses. Professional firms’ fees are significant, causing a marked trend across medium to large sized companies towards bringing various parts of their tax function in-house. So what are the benefits of an in-house presence?
- Economic factors: internal resources and compliance come at a fixed and predictable cost.
- Continuity & convenience: an in-house tax team with knowledge of the business and an aligned understanding of its specific needs and operational issues is beneficial. An in-house tax team can act quickly and efficiently to the changing environment of a business, from acquisitions to diversifying product offerings and exploring new markets.
- Increased accountability: under Senior Accounting Officer legislation, the individual responsible (usually the CFO) is required to personally certify that their company’s systems are fit for purpose of reporting taxes.
With businesses reducing staff headcount, there may be issues around approval of additional resources. Businesses may not want to go through the arbitrary process of recruiting tax professionals because they perceive the talent pool to be relatively scarce.
However, we have seen a significant rise in candidates wanting to move in-house and further their career within a dynamic, fast-growth business. This has resulted in the talent pool available across industries diversifying. With the more complex and varied environment that in-house tax brings to an individual’s career, we often find the opportunity to establish or join a developing function as one of the most sought after areas of the market.
For those organisations who believe that establishing a new in-house tax function may be an ambitious step from where they currently are, a strong interim tax resource can sometimes bridge the gap without taking on long term risk.
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