Spotlight on Tax
An interview with Matt Ellis, Managing Partner for Tax & Legal, Deloitte UK
As the pandemic hit, our clients’ tax advisory needs focused on the details of furlough and home working. Matt Ellis, Managing Partner Tax & Legal looks ahead to how the pandemic is expected to influence tax services in the coming months.
What have been the key growth areas for Tax this year?
The first 10 months of the 2019/20 financial year were characterised by a strong M&A transactions market. We also concentrated on growing our legal business, customs services with a focus on global trade and immigration work. Clients needed our advice on tax law, which is changing around the world, and how to reshape their tax functions through increased use of technology. Of course, since the start of the pandemic, those defining characteristics, like strong M&A activity, have been impacted the most.
Since March, we have found clients need our support more than ever but the focus has changed. This has ranged from helping with claims for government support – such as through the furlough scheme – to assisting them in dealing with the new virtual working environment. One example has been establishing the tax position of displaced employees including those who, during lockdown, may not have been based in the country they usually work from. Recently, we have begun to see an up-tick in the transactions market as prices settle and companies assess new opportunities. Going forward, we will continue the work we have done over the past year on trade and the compliance costs of dealing with new customs obligations, now the UK has left the EU.
What has COVID-19 meant for Tax and our clients?
Our primary focus has been helping clients to manage their cash positions, particularly in those sectors more hard hit at the beginning of the crisis. We have been impressed with HMRC’s efforts in relation to the Job Retention Scheme and giving taxpayers “time to pay”. We have worked closely with them to provide feedback on the effectiveness of their new measures and in suggesting practical improvements. I am hopeful that such collaboration with advisers, in the interest of the country, will continue.
What are the big trends/shifts you’re expecting in the months and year ahead?
It’s clear to me that we are heading into a new and different tax environment. While we don’t expect any significant tax rises imminently, as businesses struggle to rebound from the impact of COVID-19, it seems inevitable that tax as a share of GDP will increase in the medium to long term. Speculation and debate on what changes might be made has already begun. We will continue to focus on helping clients to understand the complex technical and practical impact of any future changes. This, and using technology to improve tax compliance, are two of the biggest challenges facing clients, and there is still much work to be done on the latter.
What are you most worried about?
The shape and speed of the recovery from COVID-19 are still very uncertain and the challenges our clients face have grown and altered as a result of the past few months. Both Deloitte and client tax functions tend to be office-based and, as we operate remotely, we are still learning how to connect and learn differently in this environment while maintaining strong relationships. Although this has been an adjustment for everyone, our Tax practice has shown it can successfully support clients during this time and I feel confident that we are in a good position to help them face these challenges head on.
Lessons learned through COVID-19?
I have learned that our people, clients and those we support are incredibly adaptable and positive. We have transitioned our own workforce from office to home successfully, and assisted other organisations to be in the best possible position to carry on their operations.
Our ongoing relationship with Tax Help for Older People and Tax Aid provided a way for us to boost the charities’ efforts in a time when they were needed the most. We assisted them in setting up a home-based contact centre and provided additional technology to deal with extra call volumes. Our in-house creative agency worked with the charities to develop a campaign to help people claim financial support via the Self-Employment Income Support Scheme (SEISS). This pro-bono work has given us an invaluable insight into how different organisations have been impacted during the pandemic, which I feel will only strengthen our relationship going forward.
Being at home has given me more free time for hobbies, but I have found the lack of face-to-face contact with our own people and clients difficult. I now value those conversations so much more than I expected.
From a personal perspective, I do worry how my dog Chelsea will cope when I am not around so much!