This week Georgiana Head interviews Karen Horne, People Leader for Tax for UK and Ireland, Ernst & Young:
What are your views on the 50% income tax rate?
While I accept that the government needs to generate income from somewhere, I do worry about the impact on businesses trying to incentivise key employees at a difficult time in the economic cycle. Most businesses are currently trying to maintain employee morale and motivation whilst minimising their cost base. The increase in the top rate of income tax has the practical impact of reducing salary package values of top executives at the exact time many businesses are relying on those individuals to drive their businesses through the tough economical circumstances.
Where do you stand on the introduction of a GAAR?
While I can see there is a definite advantage in stopping blatant abuse and anti avoidance, I am not convinced that a GAAR would actually achieve this. The practical application of a GAAR is very difficult to manage and it would be too easy for uncertainty to creep in – a definite disadvantage for clients trying to plan their business and organise their tax affairs. Furthermore there is a risk of over reliance on the GAAR, making it difficult for clients to do legitimate tax planning. Graham Aaronson QC’s suggestion that an advisory panel be created should help address these issues, but I remain to be convinced that it will be sufficient – the very fact that the panel’s status is ‘advisory’ means it can be ignored.
The best piece of advice anyone has given you?
My father told me that ‘even in the most difficult situation there is always the opportunity to find something positive’. I try to live by this and experience has shown me that he was right
What is your view on the public sector cuts?
I sympathise with the individual public sector workers affected by the new pension proposals as it is always hard to deal with a change of direction which affects you financially. However, it does demonstrate the huge disparity between public and private sector pay – most businesses in the private sector have already had to go through these changes to keep costs in control. In the long term, the changes in pensions will put the public and private sector on a more equal footing in terms of reward and recruitment, leading to a more competitive market for talent. I see this as a positive change, although clearly it is a painful process to get there.
What’s the difference between working in a law firm and an accountancy firm?
I originally trained and worked as a solicitor and so have been lucky enough to work for both types of firm. To be honest the only real difference is the area of focus.
How do you combine being a mum with work?
I am fortunate to have phenomenal support from my firm, family and friends. In particular, Ernst & Young are superb; they have been really flexible, allowing me to choose a working pattern that works for me, as well as offering support and informal time off for things like Christmas plays and sports days.
If you weren’t a tax partner, what would you be?
I love travel and so if I wasn’t in tax I would be a tour guide.
See the article in Tax Journal.