Tax expert weathers the storm: As people move abroad to find work, Terry Clune is boosting their businesses - and his own - by helping them reclaim tax.

Twelve years ago Terry Clune was just another Irish college student working on a building site in Germany. Like thousands of others he was earning his colleges fees working 12-hour days. On paper it looked as though he was earning big money. But the German tax office was hammering his take - home pay.

"We were paying out 50% of our earnings in tax and pensions and so on," Clune recalled. "I decided to work out the tax and claim it back."

He did the same for his friends who reclaimed an average of 1000 Irish pounds a head. At 25 Irish ponds a pop it wasn't bad money for a second-year economics and business student. As demand for his services soared, Clune hired three fellow students to help out. "There was a 24-hour computer room in Trinity where you could print as much as you wanted. That became my office," said Clune.

Clune needed the money to pay for his Volkswagen Golf which he drove home from Germany, "It was cool to have a car back then. I was the only student who could park it inside Trinity. It had German plates. They thought I was a tourist!"

Clune graduated with a second-class honours degree in 1996 and resigned himself to long years of training to be an accountant with Pricewaterhousecoopers (PWc). After two weeks Clune jacked it in. "I always wanted to work for myself," he said. Clune realized that reclaiming tax for students working abroad could become a business. He opened a tiny office by the Liffey just a few yards from the offices of Usit, the student travel agency. "We always need to be near our customers" he said.

Today Clune is managing director of the Taxback Group which employs 600 people in 23 offices worldwide. Last week he announced plans to take on 100 staff more in Cork, Dublin and Kilkenny. The recession, he believes, will be good for his business as people around the world immigrate to where the jobs are or go to study abroad. Taxback has turned the hassle of reclaiming tax, processing visas and transferring money into big business. In 2007, the company, which is 80% owned by Clune with the remaining 20% held by management, hauled in 62 million Euro in fees. PWC, his former employer, audits its accounts. Last year Taxback processed 130,000 income tax returns, 20,000 Vat claims and 30,000 Visas worldwide.

At 35, Clune is, as he has been from day one, the firm's oldest employee. Many of his key employees have been with him since not long after his college days.

Fidelma McGuirk, a director, was in the same class in Trinity. "She got a first" Clune said. Niamf Gunn and Grainne Clancy, director and operations, manager respectively, were also in college at around the same time he was. Gunn, a lawyer, led the campaign that last year freed Walter Swift who spent 26 years in prison after being wrongfully convicted of rape in the US. She had campaigned for his release for five years.

But Clune readily admits his best hire was his first - Kate Devereux. Clune married her in 2004. "We were going out after a couple of years of working together. We kept it kind of secretive at first. It was difficult in the office to maintain a relationship as we were all young, going out drinking together and working in the same office!". The couple have two children, Cara, 3, and Bill 1, based in Kilkenny. The family is building an eco-house complete with windmill and a roof coveted in grass at Fethard-on-Sea in Co. Welford. Kate is finance manager with Taxback. Clune's brothers Declan, an accountant, and Eamon, a financial engineer, also work in the business.

Clune has plans to expand operations this year. He believes the company's recent deal to provide VAT reclaim services for Visa Europe is a huge opportunity to target firms as well as individuals. "If you go to the UK on a business trip, there is VAT on your expenses and you can claim it back but most people don't because they don't know about it," Clune said. The Visa deal will allow Taxback, with a business's permission, to use its software to trawl through all of its credit card receipts to identify which should be repaid. "This is a hugely untapped source of revenue Irish companies could benefit from," Clune said. The average VAT rate is 20% in Europe, Clune said, and typically clients are refunded 10,000 Euro. "There is dead money being lost everyday," Clune said. "People don?t make claims they are entitled to because its complex. It's tedious and the average accountant doesn't want to deal with it."

Taxback, Clune said, has always grown by using its profits to reinvest in idle business. "In our business we have always focused on cost reduction. We keep them as low as we can" Taxback has zero debt, Clune said. Taxback opens new offices wherever it sees a market. "We opened in Thailand because Thais want to work in the US; in Moscow because Russians want to work in Britain; and Turkey because Turks want to work in Germany," he said. "Aiming point for the group came in 2000 when it opened a processing centre in Bulgaria. That gave us the capacity to handle large volumes of people and begin to grow quickly."

Taxback now has processing centers in Romania, Bulgaria, Russia and Peru. A lot of the time it operates through partners including travel agencies and banks such as Barclays, so customers will not always know that they are using its services. The group is unafraid of taking on the big boys, though. Transfermate, its overseas payments service, for instance, is pitched directly against Western Union. The business handles 60,000 payments a year.

Taxback provides support services for people once they have obtained their visa including money transfer, work placements and property investment advice. "Everything ties in neatly together," said Clune. "We want to sell loads of services to the same client," he said. "We are only scratching the surface in some of our markets."

Clune grew up on a farm near Avoca, Co Wicklow. "I never considered farming. I realized from the age of seven there was no money in it". Indeed, Clune cut his teeth in business from an early age. "I used to collect up nitrogen bags (their contents are used to fertilize fields) from farmers and sell them to woodcutters. It was loads of money at the age of seven," he said. Back then Clune put the money towards sheep for the family farm. His eyes these days are on bigger prizes.

"There are two companies we are looking at buying at the moment, Clune said. "I can't say anymore but we will see how it goes." Will the credit crunch have an impact on these deals? "No, we have the cash to do it." A good position to be in.

Source: Sunday Times Business & Money
Author: Tom Lyons
Published: Sunday, February 8, 2009