Google does software deal with the Revenue (taxcareers magazine September 2007)

Google - in partnership with Capgemini - has signed a major new deal with the Revenue & Customs to supply tax software.

The IT services group will add Google's wordprocessing, spreadsheet and e-mail tools to the portfolio of software applications it offers to its clients. This is the latest expression of Google's ongoing rivalry with Microsoft, which has long dominated the desktop market with its Office portfolio of products, including Word and Excel.

Google unveiled a paid-for collection of rivals tools in February, offering businesses a bundle of web-based services, accessible over the internet, for $50 (£25) a year per user. Since then it has said that the product has been signing up more than 1,000 small businesses a day and has been adopted by more than 100,000 firms. Microsoft Office, however, has around 240 million users. The partnership with Capgemini is designed to broaden Google's exposure to large corporate customers as it pushes its software as a service (SaaS) model - under which clients pay subscription fees for tools hosted on Google hardware and supplied through a web browser.

Capgemini manages 290,000 desktops in the UK, across private and public-sector organisations. It deals with the personal computers of 110,000 staff of Revenue & Customs and of 60,000 workers at the Metropolitan Police.

Credit Crunch - Impact on in-house tax jobs?

I am now hearing from a few independant sources of recruitment freezes affecting the large corporations and global banks in London that are looking to recuit. This is all quite worrying, and it would seem that this time the banks are not being slow off the mark to bring down the recruitment shutters. Although I guess this time the potential financial crises is happening in their back yard, rather than being sparked by an Enron or dot-com crash, and so they should know when to stop hiring.

Bob Reynolds, editor of Tax Careers, comments in their latest issue that recruiters are in somewhat of self-denial about what may happen to jobs in financial institutions, and that their attitude seems to be stay calm, your jobs are safe, everything will be OK. Bob responds with 'The banks will make some cuts and then, if the global economy improves, attempt to recruit again'. I would tend to agree with Bob on that.

If this potential crises does end up hitting us all hard, then in terms of in-house tax jobs, I suspect that it will be the major top tier banks and corporate giants that will need to cut in some areas, but generally in-house tax teams tend to stay fairly resilient in down turns. Tax teams within second tier banks and most other FTSE companies should stay at roughly the same size through a turbulent time. Some stand-alone tax roles may be at risk, but I think it will depend on their particular corporate sector.

The current nervousness in the market could all blow over in the next few months, and us recruiters will be smiling again, but I sense that the next couple of years could be a bit more difficult.

Tax Compliance (in-house).........in a different location?

Over the last 2-5 years, some of the large groups (mostly UK PLC) have relocated their tax compliance team to a different location in the UK. Typically with a HQ tax function based in London, they have moved the CT compliance function to somewhere like, eg Bristol or Sussex.

I have spoken recently with a couple of tax contacts in industry, and I am not entirely sure of the rationale here, maybe I am missing something?

Looking at the cost side, which is always the main driver, there will be theoretically a lower cost (ie lower salary) if you have someone based in Bristol rather than London. However, the supply of skilled candidates in that location is vastly reduced, companies often find that they can't recruit someone within the budget, the budget gets stretched, and they have to offer a salary that is closer to London levels anyway. Whilst the role is vacant, they have the option of hiring a temp/contract tax person, but the cost of the this will be higher (due to premium hourly/daily rates for temps) than a full time person in London. There is also the not insignigicant recruitment fees for hiring the people in the new location, partly because they will struggle to get people to relocate in the same role.

Clearly the other main cost is the rent/lease of the space needed for the team. I don't have details of corporate rents, but it may be a significant cost reduction to have 4 tax accountants sitting in Swindon rather than London, I'm not sure. This could be where the answer lies.

The other issue is communication, which has much more of an intangible value. The question is whether a tax compliance person will pick up more relevant information, and therefore do a better job, if they are sat with the other group tax members, compared to being sat in a far off remote location. My feeling is that they would pick up relevant information quicker if they are sat with group tax in London.

The caveat to all this is that I am not a Head of Tax trying to stick to a tight budget, and no doubt I am missing several other issues on this subject.

Any comments / debate on this very welcome.

Extra holidays - impact on business

The introduction of eight additional days’ holiday entitlement could have serious consequences for some businesses.

That is the warning from the Forum of Private Business (FPB), which is concerned that firms that do not currently give their employees 28 days’ paid leave every year will have to take cost-cutting measures to cope with the changes.

The government has published new regulations to boost the minimum holiday entitlement from 20 days a year to 24 days from October 2008, and to 28 days from April 2009. All part-time workers will be entitled to the extra holidays pro rata.

The FPB’s Research Manager, Rebecca Leavers, said business owners will not just be hit by the cost of finding cover for employees on leave. ‘Although it is true that there will be a substantial cost for some firms in terms of reduced productivity or finding extra cover for workers on leave, the impact on smaller businesses doesn’t end there,’ she said. ‘There is also the administration of such a change – contracts will have to be rewritten, for example.’

The Government claims businesses would benefit from reduced absenteeism and a more motivated workforce – but Ms Leavers is reserving judgement.

‘Many employers, who have a good relationship with their staff and actively promote flexible working, and the health and safety of employees in the workplace, still suffer from absenteeism,’ she says.

SG comment - what the above article does not reveal is that the proposed 24 and 28 days would include bank holidays, so I don't think this has major shakes. Not sure about other sectors, but all tax professionals I see have a minimum of 20 days holidays plus bank holidays, so the above proposals won't really change anything.

Tax technology gathers pace.........by Simon Godley

As IT innovation keeps developing, we find that computer technology becomes a more integral part of the tax process. In fact, it seems that companies are gradually adjusting to having most of the tax compliance process highly automated, with bespoke ERP systems collecting the relevant tax numbers from financial accounts, and throwing them into a tax return. For large multinationals with complex business operations, the use of tax systems can remove large chunks of man-hours from the year-end compliance work. This effect is also now feeding into the VAT / indirect tax arena, where a small number of tech-savvy VAT specialists are developing products to automate the VAT process for large business.

Whilst in the long run this could be bad news for tax accountants as their work load decreases, Talentpool is currently finding an increasing demand for tax professionals to actually switch into the area of tax technology.

The current tax technology market is broadly serviced by 2 types of organisation. There are teams in the Big 4 firms that advise multinationals on their tax technology requirements. Then we have the software houses that design, develop and market tax software products. There is now a large array of products to choose from for each area of tax, including specialist areas such as property taxes and transfer pricing. Some of the Big 4 firms have also developed their own tax software products, which they market to clients, and hence compete against the software houses.

I think it is only a matter of time before industry, particularly amongst the large top end FTSE 100 type companies, also bring in-house this tax technology know-how and expertise.

Movers in the Market - July 2007

Niche professional services group Jefferson Wells has recently recruited John Gearing as a senior hire within their London tax practice. John joins with a wealth of experience from the banking sector, having spent a successful 15 year period as Head of Tax in London for DKW, the investment bank

Commercial property specialist Derwent London Plc has recently appointed a new Group Tax Manager Trevor Ling. Trevor joins the group after a 5 year period as Tax Manager with Luminar, the leisure / nightclubs owner where he had gained extensive exposure to UK property sector tax issues.

Global insurance and reinsurance group XL Capital has recruited Sandra Carrillo Hernandez into the London based tax department, and who will lead the tax work for the German operations. Sandra takes up the appointment after a career break, and previously was International Tax Manager with Morgan Stanley in London