This document sets out the Group’s strategy for managing its tax affairs. The document will be published externally in accordance with recently enacted UK legislation prior to the end of the first applicable accounting period commencing 1 May 2017 and re-issued on an annual basis thereafter.
Overall responsibility for the Tax Strategy rests with the Board.
The detailed policies for implementing the Tax Strategy are set out in the Group’s Tax Policy document. Responsibility for updating and implementing the Tax Policy rests with the Chief Financial Officer.
The Audit Committee monitors compliance with the Tax Strategy and reports / makes recommendations to the Board accordingly.
The Tax Strategy is kept under ongoing review and is subject to formal review by the Board at least once a year.
The Group’s strategy with regards to tax is:
The Group’s tax strategy is fully consistent with the CBI’s tax principles for UK business (attached).
Further details are set below.
Compliance and engagement with tax authorities
The Group will pay the amount of tax legally due in each territory.
Where the application of tax law is unclear, the Group will obtain appropriate professional advice which will support the position taken in the relevant tax return.
The Group will develop good working relationships and be fully open, honest and transparent in its dealings with HMRC in the UK and other tax authorities. The Group will aim to meet with HMRC on a formal basis at least annually to update them on business developments and significant ongoing / forthcoming projects. The Group will cooperate fully with enquiries raised by tax authorities and aim to respond to requests for information within one month of receipt; where that is not possible, we will discuss the appropriate timeline with the tax authorities.
The Group is committed to managing its tax costs as part of its strategy to maximise total shareholder returns.
The Group issues guidance to investors and other stakeholders with regards to its forecast Adjusted Effective Tax Rate (being the tax charge in respect of the Adjusted Profit Before Tax divided by the Adjusted Profit Before Tax, in percentage terms) in the medium term. This is for stakeholder information purposes and does not constitute a formal performance target.
All tax planning undertaken must be driven by a business purpose or commercial rationale and support the Group’s business objectives. The Group will only enter into transactions which are fully justifiable in the event of scrutiny by the Group’s wider stakeholders.
The Group will be fully open, honest and transparent with tax authorities with regards to all tax planning undertaken.
Tax risks will be managed in accordance with the Group’s risk management framework and procedures. This includes the maintenance of a tax risk register, which sets out the material tax risks faced by the Group. This will be reviewed by the Audit Committee at least twice per year.
The tax implications of all major transactions (for example M&A transactions, corporate structure changes, and cross-border intra-group transactions) will be reviewed in advance by the Group Tax team with appropriate support from external advisors.
The Group will ensure that all decisions are taken at the appropriate level with appropriate supporting documentation. As part of the decision-making process, due consideration will be given to the Group’s reputation and corporate and social responsibilities.
The Group accepts that certainty of tax treatment cannot be achieved in all circumstances (in the context of both compliance and planning). The precise amount of tax risk the Group is willing to bear will depend on the facts and circumstances relevant to the issue under consideration. The level of tax risk, which the Group is exposed to overall, is considered as part of the review of the tax risk register and the level of provisions for tax exposures in the Group’s financial statements.
The Group’s financial reports, stakeholder presentations and other publicly-available documentation will provide stakeholders with a clear understanding of the Group’s tax position, including its tax strategy and governance processes as well as the financial position (effective tax rate, taxes paid and tax assets/liabilities).
This statement of principles is intended to promote and affirm responsible business tax management by UK businesses. These principles are based on five key observations:
Relationships between UK businesses and HMRC should be transparent, constructive, and based on mutual trust with the result that HMRC should treat business fairly and with respect, and with an appropriate focus on areas of risk. UK businesses should, therefore: