Inchcape Shipping Services Tax Strategy

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2 1 Introduction 1.1 Overview Inchcape Shipping Services in the UK consists of: Inchcape Shipping Services World Ltd, a private company, whose principal business is the provision of maritime services, and Its active UK tax resident subsidiary companies: Inchcape Shipping Services Holdings Ltd; ISS Group Holdings Ltd 1 ; Inchcape Shipping Services (UK) Ltd, Inchcape Shipping Services (Gibraltar) Ltd; Inchcape Shipping Services Ltd; John Cook (Agencies) Ltd, and PlainTravel Ltd formerly (ShipNet London Ltd) 1.2 Purpose The purpose of the is to communicate the policy for the management of tax within Inchcape Shipping Services World Ltd and its subsidiary undertakings ( the Group ). It is important to ensure that consistent and effective tax standards are maintained across the Group as tax can have a significant cash and profit and loss impact on the Group and therefore on many of the Group s business activities. 1.3 Scope Tax includes all tax liabilities of the Group, whether in the UK or overseas. UK tax specifically includes: Corporation Tax; Diverted Profits Tax; Employer Duties (Secondary National Insurance and the operation of PAYE); Value Added Tax; Stamp Duty Land Tax and Stamp Duty Reserve Tax; and Withholding taxes. This strategy will be updated regularly to reflect any changes to this scope. 1.4 Review, communication and publication This will be owned by the Board of Inchcape Shipping Services World Ltd ( the Board ). It will be reviewed annually by the Group s Head of Tax ( HoT ) 2, for approval by the Group s Chief Financial Officer ( CFO ) 3. Any proposed changes will be discussed and approved by the Board. The CFO will be responsible for ensuring that appropriate excerpts from this document are compiled and published as the publically available Group in accordance with Finance Act 2016, Schedule 19, and that the publically available document makes it clear that the Group regards its publication as complying with the duty under paragraph 16(2). The CFO will also be responsible for ensuring that the publically available Group is reviewed, updated and republished with the following years version annually in line with this legislation. 1 Primary trading company 2 Ajay Talwar (previously Alan Russell) 3 Tom De Clerck (previously Ivaylo Vesselinov)

3 1.5 Risk management Effective risk management is paramount for the Group and underpins its business strategy. The Group s appetite for risk is a carefully calibrated part of the business model aligned to the strategic and corporate objectives. The Group s on-going tax risk approach is based on principles of reasonable care and materiality. Each tax risk is measured based on a balance of impact of that risk and its likelihood and recorded in the tax risk register. Impact may consider financial and non-financial factors. The aim is not to avoid or eliminate risk entirely, but to manage closely the Group s exposure to risk. Control and assurance activities are mapped against each risk identified to provide the relevant committees with details of how the risk is managed. 1.6 Tax objectives & acceptable level of tax risk The objective in relation to tax is to support the Group s business strategy whilst ensuring compliance with relevant laws and filing obligations. Tax performance will be measured in the following ways: Developing and maintaining a clearly understood, communicated and supported strategy; Ensuring the payment of the appropriate amount of tax at the appropriate time; Forecasting and planning tax cash payments accurately; Ensuring the most effective tax elections, claims and options are considered, with respect to materiality, to manage the tax paid by the Group; Ensuring that any transactions undertaken to grow the Group are effected tax efficiently; Implementing and maintaining controls and procedures relating to all taxes ensuring that inspections or reviews by any Taxing Authority and/or other regulator do not lead to the imposition of any fines or penalties as a consequence of systemic failure; Acting in a proactive fashion in relation to the Group s tax affairs, and Maintaining the Group s reputation as a fair contributor to the worldwide economy which applies tax rules in good faith and in the spirit they are intended. Specifically as regards the UK, tax performance will be measured by the implementation and maintenance of controls and procedures for the purposes of enabling the Senior Accounting Officer to provide the annual certification required under Schedule 46 Finance Act 2009 The Group is not prescriptive in terms of levels of acceptable risk, however the Group s strategic objective is to comply with legal requirements in the taxing jurisdictions in which the Group operates, in a manner that ensures that it pays the right amount of tax while creating sustainable shareholder value, underpinned by a tax philosophy based on an open, co-operative and transparent relationship with all relevant Tax Authorities. The Group considers therefore that it has a low tax risk appetite.

4 2 Governance of tax 2.1 Policy oversight The CFO has responsibility for tax at Board level and communicates with and advises the Board on the tax affairs and risks of the Group, to ensure: The proper control and management of tax risk; The tax position is planned in line with the Group s strategic objectives; and, The tax charge is correctly stated in the statutory accounts and tax returns. 2.2 Policy principles The Board has established that the following principles will form the basis of the management philosophy and the tax policy of the Group. These principles set out one shared vision within the Group of tax compliance and one view of performance in respect of this: Good Governance The Group is committed to ensuring it is able to demonstrate its compliance with good standards of corporate governance; Risk and Internal Control - The Group has implemented a system of internal controls designed to respond effectively to significant risks to achieving the Group s business objectives. The system is designed to manage rather than eliminate the risk of failing to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Group applies these same principles to its tax affairs and accounting; Change Management - Ensuring that there is a change management policy (see below) adopted to enable the Group to handle the risks identified due to developments in legislation or changes to the business operations or processes; Transaction Planning - The Group will strive to ensure that transactions are structured such that any tax relief available to the business is realised in line with materiality considerations, efficiencies realised, and the reduction of, and recovery of, the taxes is maximised where opportunities with a credible technical standing are available, and are permitted within the approved parameters of the tax planning framework and tax planning criteria set out in this policy. 2.3 Tax Authority relationships The Group is committed to ensuring that it has open, co-operative and transparent relationship with all relevant Tax Authorities. Specifically as regards the UK, the Group is committed to maintaining an open and honest relationship in its dealing with HM Revenue and Customs ( HMRC ) and will seek to work in partnership with HMRC in relation to its tax dealings: In the event of any inadvertent error(s) arising, full disclosure, where required by law will be made to HMRC; The Group will disclose any relevant planning it undertakes to HMRC in line with the legal disclosure requirements and criteria set out by HMRC; protocols will be agreed with HMRC as required to define communication routes; and The Group will meet and cooperate with HMRC as required in respect of current, future and retrospective tax risks, events and interpretation of the law across all relevant taxes and duties, to facilitate a mutually beneficial relationship.

5 3 Organisation, processes and communication 3.1 Roles and responsibilities Inchcape Shipping Services This clearly defines the roles and responsibilities to enable the effective operation of processes and delivery of the Group s tax strategy. The key areas of responsibility and processes are set out below: The Board The Board is ultimately responsible for the Tax Governance policy. The Board has delegated this responsibility to the CFO who will report up to the Board as required. The Board is responsible for ensuring there is an appropriate framework for the implementation of the policy and oversight of the identification and management of tax risk. The Board maintains responsibility for implementing new controls where material tax risks are identified The Chief Financial Officer The CFO has responsibility for the Group s tax function and oversight of tax risk, with the detailed analysis and preparation of the tax records covered by the HoT. A number of tax sensitive processes are performed within the Group s Finance and Human Resources functions and each relevant stakeholder is responsible and accountable for meeting the tax obligations, controls and policies as issued by the Board. The performance of the HoT, and the Finance and Human Resources functions (as they pertain to tax), are reportable to the CFO, who in turn reports to the Board. The CFO s responsibilities also include: Regular communication with the Board regarding management of material tax risks and opportunities; Reviewing any significant transactions; (e.g. acquisitions, disposals, financing arrangements); Approving external advisor appointments; Monitoring adherence to the, and Ensuring accounting systems and controls report accurate and timely information for tax reporting purposes, thereby enabling them to complete the Senior Accounting Officer certification required by Schedule 46 Finance Act The Head of Tax The HoT has responsibility for the day-to-day performance of the Group s tax function and management of tax risk. The HoT s responsibilities include: Communicating with the CFO regarding management of material tax risks and opportunities; Advising on any significant transactions; (e.g. acquisitions, disposals, financing arrangements); Overseeing external advisors; Ensuring compliance with the ; Approving tax disclosures for the Group s financial statements, and Approving tax returns.

6 3.3 Information and communication (Operational Responsibility: CFO) Internal communication and escalation procedures are established within the business and understood by staff. All staff report tax sensitive queries to the Head of Tax who will raise material tax related risks to the CFO where required. The CFO and the Head of Tax will determine whether to escalate any queries to any specialist outside advisor; the Board, or to any Taxing Authority (including HMRC). 3.4 Resource management (Operational Responsibility: CFO & HoT) The competence of the Group and divisional finance teams is ensured via tax training in accordance with the nature of their roles. All staff involved in the tax accounting process have access to the tax relevant process and control documentation via the Group s Accounting Manual. Tax related controls considered in the tax risk management activities are cross referenced with the Group s Accounting Manual. All staff involved in the tax accounting processes are trained in the tax related aspects of their role. All training includes a full walkthrough of an individual s particular role, obligations and escalation procedures. The Internal Audit function provides pertinent information at each level to assist the various staff, departments and functions in the execution of their responsibility to support and oversee risk management and internal control across the Group. 3.5 Change management (Operational Responsibility: Financial Controller & CFO) In respect of legislative changes and emerging best practice, members of the Group and divisional finance teams receive regular updates from KPMG via alerts and are regularly invited to attend update meetings and web casts. Staff also have access to free web based resources provided by HMRC and the big four accountancy firms. If further advice is required staff can access specialists at KPMG, or other advisers, through its relationships. External advisers are particularly used to assist with operational change, exceptional items, and large and complex transactions and areas of the business. The use of external advice is assessed and agreed with the Financial Controller and the Group CFO and is focused on providing both technical and commercially relevant advice and guidance to the Group. The Group will liaise with HMRC to determine and agree where possible the correct treatment of key items, and its compliance requirements, wherever it is uncertain of the prevailing rules to apply. Control activities and any other relevant documentation are appropriately updated to reflect changes in the business or tax law. Any tax sensitive systems changes are agreed, monitored, tested and approved by the relevant finance team. Such changes are identified via a finance business partnering arrangement on significant projects.

7 The Group will take a prudent approach to uncertainty, but if relevant and appropriate to the historic position of any tax sensitive areas, provision will be made within the accounts to accommodate these. 4 The control activities 4.1 Risk register The business, within the audit and risk committee remit, has a wider corporate risk framework within which there is a risk register. Where material to the framework, tax risk will be included in this register. The areas of tax risk managed by the business will be subject to on-going review by the Financial Controller and Internal Audit and further documentation will be developed where deemed necessary. 4.2 Key controls Key controls to manage the risk of incorrect tax accounting will be established and the fulfilment of these will be documented in the various tax returns workings papers and associated tax sensitive high risk business processes. 4.3 Monitoring activities Internal Audit will be responsible for independent review of the business process and control environment and the Group s performance in line with the strategic principles set out above, and will be sensitive to the commercial operations in place at that time. These reviews will also cover the maintenance and access to records and the tax sensitive use of its financial systems and the appropriateness of these. The internal control system will be further monitored and supported by independent functions reporting on the Group s operations to the executive team, subsidiary boards, and the Board and specifically the Audit Committee. The business will be independently audited annually, and tax accounting, where deemed required, will be audited in accordance with this process. A plan of action will be agreed with the Chief Financial Officer and the Financial Controller as applicable to act upon recommendations made within these reviews/audits within a timeframe which is appropriate to the Group s risk management objectives and resource allocations. Tax planning parameters 4.4 Tax planning The proactive and timely communication of business transactions is key to allowing effective tax management to be undertaken through liaison with external advisors. Effective liaison at the planning stage of a transaction will ensure that tax risks and opportunities inherent in transactions are managed effectively Controls over tax planning All papers put forward to the Board that contain comments on tax must be supported by an appropriate level of tax analysis. The Chief Financial Officer will be responsible for ensuring sufficient tax analysis has been undertaken in advance of the papers being submitted to the Board. All transactions falling within the above principles and/or specifically mentioned must have Board level approval before they can proceed.

8 4.4.2 Assessment of tax planning The Chief Financial Officer will understand tax risks and opportunities on future transactions and current tax planning opportunities. The general principles defined in section 2.2 will be adhered to for all tax planning. In addition, these principles are supplemented by the following parameters defined by the Board and should be used in the assessment of tax planning. The Group will use these parameters to determine whether the tax risks presented by the adoption of any particular tax planning opportunity are acceptable or not. Commercial purpose: All transactions must have a commercial purpose. Reputation impact: The planning should have limited impact if details were in the public domain. Impact on cash flow: Cash flow should be positively impacted if planning is successful, with the potential upside benefit outweighing any downside cost. Impact on financial accounts: Profitability (post tax return) should be positively impacted if planning is successful, with the potential upside benefit outweighing the downside cost. Strength of tax advisors opinion: Appropriate external advice, including Tax Counsels opinions where relevant, will be obtained as necessary. 5 Strategy review schedule This strategy has been formalised for approval by the Board on 26 February The Chief Financial Officer and Internal Audit will review the strategy on an annual basis and recommend changes to the Board as necessary on each anniversary following its approval