Brexit could mean Britain takes a bite of #Appletax

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It’s often said that recruitment firms are the barometer of the marketplace as political and economic uncertainty have an immediate effect on hiring levels and it’s clear that the market is tough, both in terms of roles released and decisions being made.  So perhaps it’s strange that September was our best month of the year and just shy of our all time record with strong results across our divisions and regions. Or not so strange. Whilst some of our competition talk openly about reducing their UK headcount, our strategy is to continue investing in our core markets and making key hires into our business. Even more crucially, our consultants prove again and again that their motivation, market knowledge and passion for the job are second to none.  Similarly, Professional Services performed strongly with audit hires driven primarily by strong levels of demand from mid-tier firms and the Big 4 being relatively quiet. The opposite is the case for tax, with Big 4 and Top 10 firms still hiring strongly. We’re also seeing increasing demand for specialists in tax automation and tech with firms keen to bolster their advisory offering as this area rapidly evolves. Writing for the Accountancy Age, Martin Muirhead, senior partner at Kingston Smith. notes that “larger firms have been able to grow their tax income at a faster rate than their fees from audit and accounting, with seven of the top ten firms reporting more growth in tax than audit. This trend does not appear to be replicated across the rest of the 50+50, with less than a third of firms across the top 100 being able to report the same.” Martin goes on to point out that the HMRC’s ‘Making Tax Digital’ scheme is likely to see a rise in advisory fees but squeeze compliance as tax returns become automated. One thing is certain as a turbulent 2016 draws to a close, the ever increasing complexity in regulation and compliance means that there is plenty to keep accountants occupied for some time to come.   

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HM Revenue and Customs has claimed success in a new drive to recover unpaid tax, a new report has revealed. Written by legal firm Pinsent Masons, it showed the tax authorities managed to recover 60 per cent more revenue from what are described as "mass affluent" people. The affluent unit at HMRC covers those with incomes of more than £150,000 a year or wealth over £1 million and it managed to raise £137.2 million from this group last year, compared with only £85.7 million in 2013. Around half a million Britons fall under its remit and the unit has been greatly expanded under the current government, with manpower doubled in 2013 as another 100 tax inspectors were taken on. Pinsent Mason's head of litigation and compliance James Bullock said: "This surge in extra revenue from Affluent Unit tax investigations serves as a reminder that HMRC is widening its lines of inquiry. "People who would just consider themselves moderately successful professionals and business people are now also coming under the scrutiny of HMRC's specialist units." The success in raising more tax has clearly arisen from "a much more aggressive approach to prosecutions targeted at professionals and entrepreneurs", he concluded. However, critics may contend that yet more can be done and argue for more recruitment of tax experts in order to make further inroads into non-payment and bring in yet more revenue. Indeed, there may be pressure on politicians to pledge such measures in the run-up to May's general election. There have certainly been some very high-profile cases of wealthy individuals coming under scrutiny for tax evasion in recent years, such as comedian Jimmy Carr and singer Gary Barlow. However, much of the focus could also be on the tax bills of multinationals that have used all kinds of ingenious devices to avoid paying corporation tax. Tech firms are particularly notable for this, a point noted by Bank of England governor Mark Carney. He told a BBC-hosted event at the World Economic Forum in Davos last week that the tax bills of such firms are "very small relative to the returns".

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The British taxman is becoming stricter with corporations in a bid to forestall public criticism over so-called 'sweetheart deals', meaning companies and their financial experts need to ensure they are performing well in their compliance duties. An Oxford university study reported in the Financial Times found a widespread feeling among firms that HMRC has become considerably firmer since 2010, when the body came under fire for allowing Goldman Sachs not to pay interest in a tax dispute. Roughly half of companies that have frequent disputes with the Revenue believe its approach has changed, according to preliminary findings from the Oxford University centre for business taxation. This follows a similar report from law firm Clifford Chance, which pointed out HRMC has become "more aggressive" in its pursuit of companies that avoid tax. Companies told Oxford researchers that tax officials are concerned that they will face criticism if they fail to carry out their role effectively. "Because everyone within HMRC is afraid of being dragged before the [Public Accounts Committee] and Margaret Hodge, nobody is willing to overrule the specialists," one claimed. Edward Troup, the Revenue tax assurance commissioner, told the Financial Times that it would be unfair to criticise the organisation for being overly harsh - he suggested that the regulator is instead simply following its remit closely. However, he warned that the opposite criticism of 'cosiness' with businesses is also inaccurate, suggesting that a degree of closeness is necessary if HMRC is to enjoy a collaborative, mature relationship with the corporate world. His view was shared by Will Morris, chair of the Confederation for British Industry's tax committee, who told the newspaper: "This new competitiveness is built on changes in the law, not any leniency on the part of HMRC." Margaret Hodge, who chairs the Public Accounts Committee, warned last year that HMRC often loses its nerve when tasked with international tax avoidance.