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60 Seconds With: Mervyn Skeet, Head of Tax at the Association of British Insurers

Posted by Jay Sky

Mervyn Skeet is Head of Tax at the Association of British Insurers, Chair of the Global Federation of Insurance Associations and former Global Head of Tax at XL Group. An esteemed senior expert in international tax policy, Mervyn has over 25 years of experience working in tax within the insurance industry. See below Mervyn’s recent interview with Jay Sky, talking on the ABI, the challenges of tax in insurance and career advice for the aspiring Heads of Tax of tomorrow.

For anyone who isn’t aware, what is the purpose of the ABI?

The ABI is the voice of the UK's world-leading insurance and long-term savings industry. Formed in 1985, the ABI represents members in industry and strives to bring the right people together to inform public debate and policy. We cover a large percentage of the insurance market with around 250 corporate members. One of the key roles and biggest challenges faced by the ABI is engaging with both members and the policymakers who drive how insurance is going to move forward.

What’s it like working at the ABI?

I like that the ABI is a dynamic place to work, which is not what you might see from the outside looking into what might appear a traditional trade association. It feels to me like a young, vibrant workplace looking to make a real difference to this industry. Not only this, but the people are very committed, work incredibly hard, and understand the way the insurance industry operates which is absolutely key to our members.

There are three of us in the tax function at ABI, and we have over 75 years of combined experience which is something you don’t see replicated in other trade associations, inside or outside of insurance. We have a role to play in the wider insurance industry and very few associations have that level of experience in tax to help members.

What does your role involve and what makes it interesting?

As Head of Tax at the ABI, my job is to make sure we are focused on tax policy - both domestic and international - and at the moment, the international piece is becoming most interesting. In most jurisdictions, tax is a sovereign decision typically made by local government, but bodies such as the OECD and EU play a huge role in tax policy on an international scale. These bodies will make recommendations and influence government - for example, the UK government has been on record recently voicing the need to find international tax solutions as well as domestic solutions - and that’s what makes it interesting. Looking at things that not only impact the UK, but also affect the EU and the rest of the world. 

How does it compare being at the ABI, as opposed to sitting at the top of the tax team for an insurance conglomerate? 

As people would expect, very different! Working in a trade association does not come with the same daily pressures as working in industry. In a global organisation you are constantly on the move, constantly challenged and constantly under pressure, whereas here, you have more opportunity to think about policy and ways for the industry to move forward. We support the industry and use our knowledge and experience to make sure the tax directors and finance functions are aware of some of the policy issues they may not have time to think of themselves. So to sum up, the biggest difference really is time. In my last role, I was heavily involved in policy with the OECD, but I still had to do my day job. Now, policy is my day job - that’s the difference.

From a corporate perspective, what is the value-add to be involved with the ABI, for insurance organisations and tax professionals alike?

Mainly, access to policymakers. Involvement with the ABI means both insurance organisations and tax professionals have the ability to influence as part of an association, as opposed to acting as one individual entity. It is much more powerful going to speak to a Minister, or the Treasury, or HMRC about an industry issue with the backing and support of an association like the ABI.

As an organisation, we pride ourselves on being proactive for our members, not just reactive. We have the ability to influence policy before it actually happens, and use our years of expertise to demonstrate why certain things will and won’t work for the insurance industry or for our members. As an organisation, we need to be ahead of policies and constantly look ahead to what might happen going forward. This is a bit of a sifting process - taking everything happening in the tax world, highlighting areas that need to be focused on and articulating to members what is crucial to deal with. This means that insurance organisations and tax professionals involved with the ABI can benefit from our expertise and stay informed of any market or policy changes essential for them to focus on.

The nature of your role means you need to be beyond just ‘up to date’ - you need to be strategic to champion industry interests and influence policy. So you are in a prime position to tell our readers - what are the cutting-edge issues for tax in insurance?

There are three main domestic issues facing tax in insurance currently, the first being Making Tax Digital which is already in place for VAT, at least for large businesses. The plan for this to be extended to other tax areas and smaller business is certainly a prominent issue, as it is not yet clear when that will be. Secondly, IFRS 17 has brought about huge changes to the way insurances will be accounted for, and therefore has massive tax implications - particularly in the long term savings and life industry. Thirdly, there is the high rate of insurance premium tax that impacts upon the cost of insurance. 

The next generation will undoubtedly be affected by these issues, but perhaps most significantly, the whole way the international tax framework will operate going forward. This is being driven by the growing focus on digital economies. The OECD released a programme of work in May detailing how the international tax framework ought to be amended for digital companies and as it stands, insurance is in the scope of that programme. Explaining how the insurance industry fits within the digital project whilst looking at changes in the international tax framework and how people will be taxed going forward shows the makings of a challenging project. This programme is expected to be finished by the end of 2020 and is a good example of a problem that’s both short term and will affect the future of the industry going forward.

What events are upcoming with the ABI which offer the chance for junior and senior tax professionals to learn and develop?

The timing of this is interesting, as we just had our big ABI annual tax convention in Brighton in early September. This is the sixth time we have hosted this convention, and from a tax perspective is always an incredibly successful event. This year, we had a lot more junior members attend, which means they are learning about things now to take forward into their careers. These are the people who will be progressing through the industry ranks in five or ten years time, and continuity is very important - it’s already in the diary for next year for the 7th and 8th September!

In between conventions, the senior tax strategy committee meets on a quarterly basis to discuss the issues of the day, as well as other working groups that members can get involved in. The ABI also runs events throughout the year which aren’t necessarily tax-related, and we are holding our wider annual conference in February of next year. When trying to arrange events for junior members of the ABI, the issues I see facing tax departments now is that people are specialising very early in their careers. Whereas in the past you were typically given a wide portfolio and you specialised further down the line, junior tax professionals are now immediately specialising, whether this be in transfer pricing, capital allowances or the likes. The question is - how do you tailor these events for the right group of people while also including as many professionals as possible? This is something I think will prove to be a challenge going forward, both for the ABI and for junior tax professionals looking to round their skillset. 

What are your thoughts on the challenges facing the next generation of Tax Heads, and how to get there?

One of the biggest challenges is knowing how to staff your teams. When I was starting out, you qualified and then decided whether to stay with your firm or to move into industry. You would gain a good overall grounding in the way companies operate before moving into a commercial environment, but I’m not sure that is the case now in quite the same way. People tend to specialise early so often don’t have the same grounding, it seems to me, in general taxation or accounting matters. In my opinion, to be the best tax person you need a solid understanding of how financials work and this is a big challenge facing Heads of Tax now, as you are recruiting people who are specialists in their field already.

Another challenge faced by the future Heads of Tax is managing expectations. If you bring someone in as a tax assistant in Transfer Pricing for example, if they are looking to move to a managerial position within a short space of time it’s not very straight-forward. Expectations of moving quickly within an organisation are far greater than they used to be but when you don’t have a large tax function within your business that’s very hard to manage.

So how do those experts of today become the Heads of Tax of tomorrow?

My number one piece of advice would be to think strategically and look at the big picture. It’s about not just focusing on the area that you’re an expert in, but trying to understand the organisation you’re working for as a whole. Look forward and think about how tax will evolve. If you think about the last ten years, the way the general public sees the payment of taxes has evolved massively, and there is a big focus on the ‘fair’ amount of tax paid. As a general, there is a much larger focus on tax than there has been in the past, which is a challenge in itself, and so looking at the larger picture is essential.

Compliance is now key within tax functions. Moving away from tax planning, risk management is now key for most CFOs and Heads of Tax, and so you absolutely need to be strategic and think about how tax fits into the business as a whole. Be technical, be tactical, but also be focused on the strategic goals of your organisation.

What career advice would you give yourself when you were younger, and how might this differ to the advice you’d offer a newly qualified tax professional today in this field?

Try not to expect things too quickly. Naturally, you will want your career progression to happen immediately but sometimes it’s important to remember to manage expectations. When I came out of university and into the world of work, I thought I knew a lot but it became clear I had a lot to learn about tax still, and this was a realisation that needed to happen! The best advice I can offer is to learn. I still learn something new every day - try to progress your own learning whenever you have the opportunity and don’t think you have all the answers. Of course, be confident and focused, but be open to learning from people around you who have been in the industry for a long time.

You have 30 years experience in tax and you’ve progressed to a very senior level within insurance before moving into a representative and policy-level role. What defining moments have there been for you throughout?

The best part of my career was spent in two multinational insurance companies, and one defining moment for me was being made Head of Global Tax at XL Group back in 2007. I had been the European Head of Tax for over four years in which I learned a lot about the organisation to take with me into the global role, which really felt like the start of my being able to influence at a higher level. To me, the turning point was the first 100 days. Having to get your team in place, decide who is a good fit and is supporting you in your role, and having to make tough decisions makes you think very carefully about what you need and who you want on your team. 

Another career-defining moment for me was my appointment as Chair of the Global Federation of Insurance Associations (GFIA), which has allowed me to play a pivotal role beyond just the UK. The GFIA is seen as an association of associations, and my role as Chair means I can interact with people from other associations around their world and get their views on issues and policies. This allows us to play a role on the global stage and influence governments at a national level, which really demonstrates the capabilities we have at the ABI.

Being at the centre of the insurance tax industry means you would routinely be approached by those looking to hire and move in this market. What advice would you offer hiring managers and candidates alike today?

Well, it’s certainly a challenge, but it’s all about finding the right options. Of course, you want to try and attract the most talented people in the industry, but most importantly you need to think carefully about what you’re looking for. Don’t hire somebody without defining the role properly first. I have always found that you can get a sense quickly if someone is right for the role as long as you know what you are looking for - if you go into an interview blind, it’s much harder that way. 

Tie your interview strategy into the strategies of both your tax function and the wider organisation. Essentially, it’s about knowing what it is that your tax function is trying to achieve for the organisation as a whole. If you know this, you know what you need in the ideal candidate.


For more information on this article or to speak to Jay Sky about your recruiting needs, contact him on 020 7269 6343 or jay.sky@pro-tax.co.uk.


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