Tax affects every area of our lives on a daily basis, whether you’re aware of it or not. Historically, tax trainees came from backgrounds in accountancy or audit, but modern recruitment practices allow for young people to join the profession directly. In this article, we take a look at what pursuing a tax career would mean for you and the different areas you can work in.

Tax is an area that is in a constant state of flux. With each new government, the whole election process usually focuses quite heavily on tax and being a part of that system is surely an exciting thing. How much tax we pay and what they plan on doing with it can win or lose the right to run a country! Tax is rarely out of the news and a source of much debate.

There are six major types of tax and most advisers specialise in one while obtaining a basic knowledge in all types of tax. The type of work you could end up doing varies hugely depending on your specialisation. Most advisers are either corporation tax specialists (people who deal with a business’ taxes) or personal tax specialists (people who deal with an individual’s taxes). There are also specialists in VAT, inheritance tax, stamp duties and capital gains tax.

There is a lot of variety and diversity to be found when working in tax, the ‘workplace’ could be almost anywhere!

Professionals currently working in the tax industry come from a wide range of backgrounds and modern recruitment practices are allowing for even more young people to join the profession directly through highly-regarded, structured school leaver programmes.

How do I know if taxation would be a good career for me?

Taxation is an excellent career for the academically-minded. It requires a high level of attention to detail, good English and maths skills and the ability to communicate. Although many people assume that it is a ‘maths job’, actually the vast majority of work is law based. Therefore, if you have an interest in maths and law then this is the job for you.

The tax profession can be very rewarding both financially and intellectually. It is an industry with a strong reputation for continuing professional development (CPD) – as tax constantly evolves and changes you are always challenged and have to review your advice and knowledge regularly.

You can make or break companies with your advice – the savings you make for them could mean that they can build, invest or create for a secure future. It is very much a people industry as much as it is numerical and legal.

What sorts of things do tax advisers do?

As mentioned above, most advisors work with corporate or personal tax however, there are also specialists in VAT, Inheritance Tax, Stamp Duties and Capital Gains Tax. Most advisers have at least a basic knowledge of all the main taxes.

A typical personal tax adviser will complete tax returns for their clients each year as well as dealing with ad hoc queries on things like PAYE codes, National Insurance contributions, tax when you sell a property, inheritance tax and how to deal with Her Majesty’s Revenue and Customs. Such a wide range of possible topics requires the adviser to be able to think on their feet.

Tax law is continually evolving, so part of a tax adviser’s job is to keep up-to-date with the latest changes so that they can properly advise their clients. To supplement your own monitoring of these developments, there are professional courses available to help you stay on top of things.

Initially the learning curve can be quite steep because of the amount of information to take in. However, most companies balance this by first assigning you simple tasks such as basic return preparation, filing and other administrative duties before they let you loose on their clients. For the first couple of years, be prepared for a lot of studying while you get to grips with the law.

Tax is ultimately split into two types, direct and indirect tax. Within direct tax there are many areas you can specialise in. Regardless of whether you start your tax career with an accountancy firm, legal practice or in-house, where you specialise will eventually be a decision you will have to make. Each area offers different benefits and opportunities for your career:

Direct Tax

This is a type of tax that is paid directly by the individual, for example income tax, corporation tax or national insurance contributions. Here are the difference areas you can work in that deal with direct tax:

Corporate tax

Corporate tax is a direct tax that HMRC describes as follows: ‘Corporation Tax is a tax on the taxable profits of limited companies and some organisations including clubs, societies, associations, co-operatives, charities and other unincorporated bodies’. What is important is that it is paid on profits rather than turnover. As the old accounting saying goes: ‘turnover for vanity, profit for sanity’. Most people don’t appreciate that large businesses can have huge turnovers but actually be loss making. This is the crux of much of the media attention around the tax affairs of companies like Starbucks and Amazon at the moment.

Any company or organisation which is based in the UK has to pay Corporation Tax on all their taxable profits – no matter where in the world those profits arise. Companies which are based overseas but operate in the UK – perhaps they have a branch or office here, but are headquartered abroad – only pay UK corporate tax on the profits arising from the trade in the UK.

Corporate Tax differs depending on whether you choose a path in Commerce & Industry, Financial Services or Transfer Pricing:

Commerce & industry

• A tax career within commerce and industry provides an opportunity to grow commercially and can eventually lead to participation in significant business decisions. You can gain greater exposure to wider tax issues and an increased in-depth knowledge of the role that you are involved in.
• Companies in this sector can range from retailers to software companies, oil and gas organisations through to manufacturers and from pharmaceuticals to property companies. There is a lot of variety and diversity to be found when working in tax, the ‘workplace’ could be almost anywhere!

Financial services

• Opportunities in financial services are plentiful for newly qualified tax professionals, as Heads of Tax seek support for increased transactional activity and to manage reputational risk. Furthermore, when more senior opportunities arise the trend is to promote internally, which once again creates the need for newly qualified tax professionals to backfill the positions that have been vacated. Working for such an institution provides the invaluable opportunity to gain an in-depth understanding of the full range of financial services and products such as banking, insurance and investment management sectors and to understand their relation to tax.

Transfer pricing

• Transfer pricing refers to the setting of prices between related companies (for example a parent company and its subsidiary) for goods or services. Transfer pricing has become a topical area within tax due to the proliferation of legislation in an ever increasing number of countries around the world.
• Globalisation has led to increased international trade and cross-border transactions, and transfer pricing is an area of considerable focus in today’s economic climate across both commerce and industry and financial services. Being a cross-border transferable skill, transfer pricing offers a good route into an international tax career.

Reporting corporate tax

It is not enough for a company to simply pay over its corporate tax to HMRC – the company also has to report its tax liability and the supporting calculations. Unfortunately, HMRC like to have proof, and won’t accept a guess or estimate of what the tax due might be! These calculations are called returns. The company also has to show in its accounts that it has made provisions from its profits to pay for the tax. This is the most basic way that a career in corporate tax begins, as someone has to analyse the company’s accounts, review its income and expenditure and work out what constitutes a profit for tax purposes. This is called tax reporting and tax compliance (called so because it is being ‘compliant’ with tax legislation).

At graduate level

So how does this affect you? Many tax professionals make their careers from tax reporting and compliance. They train in accountancy firms or within in-house tax teams in large companies or banks. Usually they complete a qualification such as the ACA, ICAS, ATT or CTA or a combination of them. Graduates training in corporate tax in accountancy firms usually start off by learning how to do tax calculations and tax returns. Even if they work in advisory teams, they usually have to complete some part of their training in compliance. As they become more experienced they move on to reviewing the work of more junior staff and then on to managing teams and projects.

Some of the larger firms such as the Big Four have compliance centres which prepare the basic computations – some of these centres are in the UK and some are abroad. Often as a trainee in a Big Four firm you will complete a secondment or work placement in a compliance centre.

Transferring between big and small firms

It is not just large companies that pay corporate tax – any UK resident company that makes a taxable profit has to pay. So even small businesses such as your local takeaway or drycleaners may have to file a corporate tax return and pay corporate tax. These businesses also need tax advice, so if you don’t like the idea of working for a large international accountancy firm you could still have a career in tax working in a smaller local practice.

Luckily, tax experience is transferable, so if you start your career in a small practice but find yourself beckoned by the bright lights of a big city, you can always look at moving to a larger practice once you qualify. Similarly, many people who train in large firms later decide that they want to deal with smaller local businesses. Others decide that instead of advising a multitude of clients they would rather work in-house within a company and help it to get its tax right. In fact, being a tax adviser is rather like being a doctor – you can choose the type of specialism like general practice or surgery to suit your personality and aptitude.

Graduates looking at starting their career in a law firm can complete a ‘seat’ in corporate tax to help them decide if this is what they want to specialise in. Tax lawyers help companies to calculate the tax due on transactions, such as the sale of one company to another. They look at the ‘due diligence’ of the transaction, making sure that the sale is done in a legal way and that all tax is accounted for. They also advise on points of law related to tax (there are over 9,000 statutes relating to tax, so there is plenty to advise on).

Further specialisation

Corporate tax advisers can develop specialisms such as capital allowances, mergers and acquisitions, research and development (R&D) or transfer pricing. R&D, for example, is linked to government backed schemes to try and create innovation in the UK. HMRC gives tax relief for companies which spend money on researching and developing new products or processes which could in future add value to the UK economy. R&D specialists help companies to claim these reliefs.

Challenges, skills and incentives

One of the key reasons people decide to start a career in tax, and why they remain in the profession, is that tax changes all the time. The government changes tax legislation to take account of changes in the UK and global economy and also changes legislation to close loopholes. Tax advisers make their money by advising businesses of these changes and how they affect them. A key attribute of being a tax adviser is the ability to communicate with clients, business leaders and the team that you work with. It is not just verbal communication, but the ability to write clear reports covering complex points of tax law in such a way that the client understands how it affects their business. As your career progresses you may also need to develop sales skills to pitch to businesses for their tax work.

Ultimately, a career in corporate tax can lead to partnership in an accountancy or law firm, or a Head of Tax role in industry. As accountancy firms become increasingly accommodating to lifestyle requirements, the modern corporate tax specialist can have the best of both worlds: a lucrative professional role which can be comfortably balanced with family or other external commitments.

Private client services

Private client services involve working with individuals to help them with their tax affairs, helping them to comply with tax regulations and manage their finances efficiently. Working within private client services opens up careers in diverse sectors within tax, such as non-domiciled individuals, private equity and entrepreneurial services.

Opportunities in these sectors exist within smaller boutique firms and family offices, where more autonomy and responsibility for a specific area of tax falls to fewer people.

People services

People Services Tax provides both variety and the opportunity to specialise in a single element of taxation.

Opportunities within people services in expatriate tax, international assignments and global mobility have increased due to the number of individuals choosing to work, live or retire abroad.

Indirect tax

Indirect Tax is a tax made on goods or services as opposed to people or organisations, such as VAT. Taxation specialists with expertise in Indirect Tax are very much in demand due to the increasing volume of cross-border trade, the importance of cash flow within organisations and the increasing sophistication of tax regimes in many countries around the world.

Due to the nature of VAT and other Indirect taxes (such as Excise Duty, Insurance Premium Tax and Stamp Duty), opportunities to develop and further your career on an international scale are quite realistic.

If you want to develop well-rounded advisory and business skills, at the same time as acquiring niche technical expertise that is in increasingly high demand on a global scale, then a career in Indirect Tax could be for you.

Employment in this area

The Big Four accountancy firms have sizeable Indirect Tax teams in place in the UK (c. 200-250 specialists nationally). These individuals advise how indirect taxes impact their clients’ supply chain and financial and accounting systems. Their offering is broad-ranging, but includes identifying and addressing areas of risk, providing timely planning solutions and the application of technology-based compliance management solutions. In a Big Four firm, one would tend to specialise in advisory work in a particular sector, for example: banking, insurance, funds, technology, telecommunications, retail, energy, travel & transportation, middle markets and the public sector.

Smaller accountancy and some law firms also have well-established Indirect Tax consultancy teams in place (team sizes can range between 1 – 50 specialists nationally) and there are as well a number of independent Indirect Tax consultancy practices providing successful alternative advisory services. Individuals working in such organisations tend to have developed really broad-ranging in-depth Indirect Tax expertise.

Most large multinational commercial organisations and financial services institutions have their own internal Indirect Tax specialists in place. At the more senior grades, typical roles include providing strategic advice on indirect tax implications that affect your employer as well as managing compliance, often on a global scale. At the more junior grades, Indirect Tax specialists can fulfil compliance, accounting and process positions, as well as advisory roles.

In addition, HM Revenue & Customs employ specialists to manage the government’s collection of Indirect Taxes. Typical positions include visiting VAT registered companies to ensure they are paying the correct amount of VAT at the correct time.

Routes into private sector Indirect Tax careers

The Big Four accountancy firms offer graduate training programmes in Indirect Tax. As well as learning the arts of consulting by working on big ticket client accounts, one would also typically study towards a professional qualification, usually the CTA (Chartered Tax Advisor), but some firms also combine this with training towards an accounting qualification. Graduates will need to demonstrate exceptional interpersonal and teamwork skills, the potential for developing strong client relationships, intellectual capability and the ability to apply knowledge in a practical way. Your degree could be in almost any subject, but usually you would need a 2:1 degree or above and good A Level grades.

One can also move into a private sector Indirect Tax career from positions in HM Revenue & Customs if your role there has afforded you experience of Indirect Tax legislation.

More of a rarity would be transferring into an Indirect Tax position at a junior level from a prior accounting or direct tax position.

Future prospects

Indirect Tax expertise is a much sought after commodity. Should one wish to carve out a career in an Indirect Tax consultancy environment in an accountancy firm, this can lead to Partnership for those who demonstrate exceptional business development, management and strategic skills on top of technical aptitude.

Alternatively, with a few years’ experience of Indirect Tax, you can move to an in-house role, where you could end up as Global Head of Indirect Tax for a major commercial organisation or financial services institution, provided you demonstrate the requisite commercial aptitude and strategic impact.

UK Indirect Tax specialists are also in increasingly high demand in other countries and the skills are progressively more transportable – once you are qualified, it’s possible to secure secondments or permanent moves to the USA, Australia, Far East, Africa or mainland Europe.

Where do tax advisers work?

You can find tax advisers working in the following places:

• An accountancy/financial services practice
• A specialised tax advice company
• ‘In-house’ at a large company outside of the financial services industry
• At home for themselves.

As tax is continually changing, tax advisers tend to remain in their chosen specialism for many years. However, it is possible to move from one specialism to another. Advisers working for accountancy companies sometimes decide to sit accountancy exams such as the ACA or ACCA and move into the audit department. Some advisers decide to specialise in expatriate tax or cross-border transactions, which can lead to opportunities abroad. The CIOT also offers an Advanced Diploma in International Taxation.

Tax is a very flexible profession. Some companies are happy for you to be involved in their marketing activities so your desk job doesn’t have to involve too much desk work.

Ultimately, tax has many opportunities to offer graduates, with clear progression in a stable industry – one of the certainties in life are taxes! High calibre graduates will always be in demand and it pays to do your research – by making informed decisions at the start of your career, you will be able to enjoy the rewards of a sound and secure role with the benefits of financial freedom for many years to come.