Director Alex Mann presents the Indirect Tax market report for June...
As another quarter passes by - and the economy continues to show promising signs of recovery - there is a lot to feel bullish about as we look ahead for 2021.
Of course, if the last year has taught us anything, it’s that we shouldn’t count our chickens until they’re hatched: it was precisely this time last year that Harvey John documented an almost non-existent tax recruitment market!
However, when we reflect on the steady rise of hiring since 2020’s pandemic induced drought, Q2 2021 has proved just how resilient the European indirect tax market is. It’s been the first time that a quarter has resembled pre-Covid levels of activity: professional services hiring is in full flow and there’s been a steady stream of in-house opportunities emerging across the grades.
While this is great news for job seekers, it’s simultaneously causing headaches for hiring managers. Indeed, such an uptick in demand for indirect tax skills has hit home just how ‘candidate short’ the market really is.
As businesses navigate through a dynamic and ever-changing legislative landscape and employers play catch up from suppressed hiring throughout the pandemic, the demand versus supply is disproportionate.
Looking closely at HJ’s indirect tax mandates for April to Jun, just over 72% of our European assignments were created due the hiring company being too under-resourced to fulfill current engagements. Those of our clients who contacted us to recruit ‘proactively’ (as opposed to ‘reactively’) paled in comparison at only 16%, leaving the remainder of our searches for replacements.
Predictably, adding to the frustration for much of these 72% of hiring managers was the sheer delay in engaging with the candidates. Much of the issue lies in the fact that, despite knowingly recruiting in a candidate short market, many in-house teams waste weeks (sometimes months) by wishfully posting an advert in the hope that the perfect candidate happens to be on that job board and apply.
As an attempt to save costs, there is nothing new in this approach but, as indirect tax skills become more sought after and new vacancies ramp up, this has been a consistent issue for tax leaders who do not have the time to be bogged down by recruitment challenges. Granted purse strings have been tightened throughout the pandemic but, in almost all cases, these businesses will then turn to us recruiters after a failed search - or the vacancy is re-released on the market due to the first hire not being the best fit.
Indeed, as opposed to continental Europe, we mainly see the above issue in the UK market where there are more centralised in-house talent acquisition teams but the instances of this have been fairly widespread this quarter. However, where UK employers face an added challenge is not being able to tap into the pool of EU based talent as easily as before.
Whether it be the large pools of shared-service centre professionals across central and eastern Europe, or the homegrown talent pool of cross-border advisors from Belgium and the Netherlands, these professionals who have been crucial to strategic indirect tax hiring are now harder to appoint.
Of course, recruiting from the EU is by no means unattainable but there are various administrative burdens that bring delays in the hiring process. As it stands, UK employers are still navigating through this and we expect to understand what the possibilities look like for non-UK based candidates later in 2021-22.
Accounting and legal firms once again took the top spot for the most active hiring in Q2, rebounding spectacularly from last year.
Specifically, the Big 4 across the UK and Europe are well and truly back in action and we are seeing specialist sector teams (notable financial services and retail) looking to invest in headcount. There’s also been an increased appetite across mid-to-top tier firms in the UK & BENELUX who are supplementing their bench of leadership talent, resulting in an influx of Senior Manager & Director opportunities.
In turn, this has created some ‘replacement’ opportunities too, making it a good time for those below Partner level to explore the market. Equally, recruitment at the junior grades has risen, suggesting that firms are carefully pipelining their future talent.
Across the compliance firms, recruitment has been buoyant but not as heavy as usual. One suspects that demands for compliance specialists and data analysts may increase due to the influx of e-commerce activity throughout the pandemic.
According to Statista's Digital Market Outlook, Europe experienced a 20 percent increase in e-commerce revenue. With this and, more notably, the new One Stop Shop requirements in the EU, we are likely to see traders needing guidance through registrations and thus a potential increase for specialist e-commerce VAT specialists.
Finally, while it’s not yet made its way into our current mandates, what is increasingly landing on the desks of indirect tax professionals are the various environmental taxes. Indeed, governments and international bodies have been increasingly relying on taxation to tackle environmental concerns and the primary arena for this is currently within indirect tax.
According to ITR's recent survey, 68.6% of tax professionals expect post-COVID-19 economic pressure to lead to more environmental taxes and 44.1% felt that indirect tax will be the primarily area for these initiatives (as opposed to 22% for direct taxes, 2.5% for transfer pricing, and 28% for all of these taxes).
While the in-house market was patchy throughout Q1, this quarter has been far more consistent across the grades.
According to our analysis for the UK&I, BENELUX, and DACH, 53.3% of vacancies resided in the UK&I with the majority of those situated across London and Dublin. As usual, the Dutch market carried BENELUX (17.6%) with little to be seen in Belgium or Luxembourg and there was a similar picture with most of DACH’s opportunities (29.1%) residing in German cities. While we do not track the market as precisely beyond these territories, there was a clear spike in opportunities across Hungary and Portugal (the latter of which appears to be a new hotspot for SSC and cost-effective hiring).
Typically, the largest proportion of vacancies resided at the manager grade but it’s been refreshing to see several senior level vacancies emerge onto the market.
By and large, the most vocal sectors have been retail and e-commerce - two industries that have, for the most part, flourished in the later stages of the pandemic. With that said, across all sectors there still remains some doubt around permanent contracts with many hiring managers only able to get sign-off on 12 month FTCs.
As we move ahead to Q3, we anticipate an increase in demand for sector specialists and of course any professional services candidates with 3-6 years experience. The issue of a candidate shortage will remain a key challenge for hiring managers due to not only the surge in demand, but the challenge in extending searches to overseas talent pools.
Of course, the rise in hybrid working will enable some city based teams to tap into a regional talent but, as this working practise is now prevalent amongst the majority of businesses, the historical advantage of offering this in your recruitment strategy is now plateauing.
As such, our message to tax leaders who are facing the heightened pressures to bring onboard new hires quickly and tackle a complex legislative landscape is to be robust in your efforts to recruit. In a discipline where recruitment delays can be so costly, is it really worth trying your luck by posting a job advert?
Keep your chosen recruiter in the loop of your plans so they can have a shortlist ready as soon as you get the green light from HR. With a fair wind, you’ll have the right candidate in your team one month later.
Alex Mann is a Director at Harvey John
For expert advice on how to get the best out of your tax career, whether in a professional services firm or in-house, contact us today.
Harvey John is a specialist Accountancy, Tax & Treasury, and Legal recruiter operating across the UK & EMEA market