PwC US announces major reversal in tax division strategy

April 22, 2024

PwC US is set to reverse its controversial decision to split its tax practice, a decision that had previously redefined its operational model.

Under the guidance of incoming senior partner Paul Griggs, the firm aims to reunify its nearly 1,000 US tax partners, marking a departure from the divisive restructuring initiated under current leadership.

The decision to reunify its tax division reflects a departure from the industry’s traditional model, which had been significantly altered under Tim Ryan’s tenure.

Griggs, who is set to take over in July, has expressed a strong belief in the intrinsic value of the PwC tax brand, emphasizing that such a brand should never be diluted.

The original split was described by Ryan as a once-in-a-generation change, aiming to integrate PwC’s US audit business with tax reporting and compliance under “trust solutions,” while tax consulting activities were moved to the advisory arm, renamed “consulting solutions.”

This reorganisation sparked widespread debate within the industry regarding the Big Four business model.

However, discontent among tax partners and a leadership election that saw all main candidates advocating for the business’s reunification have led to this strategic U-turn. Griggs plans to scrap the “trust solutions” and “consulting solutions” brands in favour of more traditional assurance and advisory labels, reflecting a broader industry trend of maintaining integrated tax services.

Notably, Ryan’s reorganisation did not extend to PwC networks in other countries, where tax has remained a standalone business line. This reversion under Griggs’s leadership signals a reinforcement of traditional structures within the firm and the industry at large, potentially influencing global practices and the strategic direction of other Big Four firms.

The move also comes amidst broader discussions within the industry about the separation of audit and advisory services, with competitors like EY exploring plans to spin off their consulting arms.

PwC’s decision to reunify its tax division underscores the complexities and evolving nature of professional services firms’ business models in response to regulatory, market, and internal pressures.

[Accountancy Age]