The overall objectives of the group are as follows:
- To comply with UK tax legislation and deal with HMRC in an open fashion with due regard for the group’s reputation.
- To only undertake tax planning in the context of wider business activities which have a commercial economic basis.
- To maintain accounting systems and controls sufficient to support tax compliance obligations.
- To make timely and accurate tax returns that reflect our tax obligations and to ensure we meet these obligations as they fall due.
- To provide robust and transparent tax disclosures for financial reporting.
- As a business, to generate profits in a tax efficient way.
- To ensure that intercompany transactions are undertaken on an arm’s length basis and during the ordinary course of business in line with UK tax legislation and the OECD’s transfer pricing guidelines.
Compliance with tax laws is embedded within the group’s governance structure through consideration of tax issues at all stages in the business cycle. Specifically:
- The group tax strategy is part of the Board approved framework of policies, approved annually by the Audit and Remuneration Committee.
- Responsibility for the group tax strategy and management of tax risk of the UK group companies ultimately sits with the UK Chief Operating Officer, with day-to-day responsibility assumed by the UK Financial Controller.
- All new products require consideration of tax implications and appropriate systems to be in place to properly account for tax. The Operational Risk Management Committee assesses all operational risks, including related to tax, inherent in new products to ensure that they are appropriately covered off before the products are launched.
- To assist with tax planning issues and interpretation of UK tax law and/or in areas where there are changes to UK tax legislation which affect the group, appropriate professional advice, as necessary, is sought to assess the impact on products, services or transactions.
- Tax planning is driven by commercial transactions and is managed as a cost to the business.
- Tax is an integral part of the Finance function and compliance with all UK tax filing and payment deadlines is overseen by the Financial Controller.
- The group maintains a retention policy for documents as per HMRC requirements.
- The group has signed up to HMRC’s Code of Practice on Taxation for Banks which covers the group’s approach to tax governance, communication with HMRC and risk management of tax.
Communication plan with HMRC
The group aims at all times to:
- Communicate with HMRC in an open and constructive way. Adopt a collaborative approach to resolve issues and, where appropriate, in advance of filing or payment requirements.
- Make full disclosure of all items required in filing UK tax returns.
The group has a low appetite for tax risk and does not participate in aggressive planning or complex structured arrangements designed to minimise its tax liabilities.
The group's approach includes:
- Knowing how tax fits into the group's overall business strategy, and ensuring that the right people are responsible for basic business processes as they affect tax.
- Establishment of a regular monitoring process.
- Independent assurance that the tax function is running properly through a risk management matrix.
In making this strategy available the group regards its publication as complying with the duty under paragraph 16(2) Finance Act 2016 in the current financial year.