Tax Compliance (in-house).........in a different location?
Wednesday 26 September 2007
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.
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.
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