The least publicised professions within investment banking are often the highest paid: CDOs before everyone became familiar with them, CVA trading-turned CVA securitization, and – tax structuring.
In truth, we have attempted to shine light on the entirely legal, but seemingly nefarious, world of tax structuring (ie constructing complex schemes to trade and reduce tax liabilities) before, as have others.
Back in 2009, the Guardian claimed that the 110 people working in BarCap’s tax structuring unit were generating £1bn in profit between them - or £9m each. It seemed inevitable that they were paid far more than BarCap’s £200k average. Unsurprisingly, Roger Jenkins, former head of BarCap’s tax structuring unit was renowned for earning more than Bob Diamond.
A lot of tax structurers are professional accountants. In this sense, tax structuring is the conquest of the underdog: the ascent of the professional bean counter to a position where he or she can earn more than a trader. Jonathan Zenios, who was head of BarCap’s ‘Structured Capital Markets’ team until December last year (and has recently set up a hedge fund), began his career at Arthur Anderson.
Now, however, the crazy days of tax structuring may be past. As various sources report this morning, the Treasury has snuffed out a £500m “aggressive” tax structuring scheme pioneered by BarCap to help another bank to reduce its tax bill. Worse (from the tax structurers’ perspective) the Treasury’s activated its ability to seize all the tax owed retrospectively.
So, is it all over for tax structuring careers? Zenios’s departure bodes ill – he’d worked in tax structuring at BarCap for 16 years before he decided December was an opportune time to leave. When we investigated last year, headhunters said plenty of tax structurers had lost their jobs already.The latest action by the Treasury certainly isn’t going to do the profession any favours. However, it may drive ‘structured capital markets professionals’ deeper into the shadows. People who can invent vehicles that will reduce tax liabilities legally - and without attracting the attention of the Treasury - will always be in demand.