UK TAX STRATEGY
This UK Tax Strategy sets out the approach of the Deutsche Post DHL Group (DPDHL or the Group) to risk management and governance arrangements in relation to UK taxation. It applies to all UK entities in the DPDHL group (the UK Group) and covers the UK Group's attitude towards tax compliance, tax governance, tax planning and tax risk management as well as our approach to dealing with the UK tax authorities (HMRC).
The UK Tax Strategy has been derived from and is consistent with the Group's former Corporate Strategy, Strategy 2020. Strategy 2020 provided a framework for the Group's values, beliefs and aspirations and was based on the three pillars of Focus, Connect and Grow. Each of these pillars provided clear objectives for the coming years with ambitious yet achievable goals. Success was measured in terms of the three bottom lines of being the Provider of Choice, the Employer of Choice and the Investment of Choice. Strategy 2020 has recently been replaced with Strategy 2025. With Strategy 2025 - Delivering excellence in a digital world - the Group is laying the foundation to continue its successful growth trajectory beyond the horizon defined by its previous Strategy 2020.
Code of Conduct
Underlying everything the Group does is a commitment to responsible, ethically irreproachable and legally compliant behaviour. The objectives and rules that govern this commitment are summarised in the Group's Code of Conduct. The UK Tax Strategy is underpinned by the Code of Conduct in order to ensure full compliance with all statutory obligations.
UK Tax Strategy
The UK Group is committed to an open and transparent approach to its tax affairs. The UK Tax Department consists of a team of talented tax professionals whose responsibilities include ensuring compliance with all relevant laws and regulations, and managing tax risks with professional diligence and integrity. We seek to have a constructive and open relationship with HMRC and are committed to paying the right amount of tax at the right time.
We focus on our core activities to achieve industry-leading performance.
Our focus is on ensuring full compliance with all statutory obligations, including all relevant tax laws and regulations, in order to pay the right amount of tax at the right time.
Roles and Responsibilities
Overall responsibility for the Group's tax governance and strategy lies with the Group's Chief Financial Officer (CFO) with oversight provided by the DPDHL management board. The Group Head of Tax reports directly to the Group CFO and tax is regularly on the board agenda. Responsibility for UK tax affairs is delegated to the Head of UK Tax, who in turn reports into the Group Head of Tax via the Head of Taxes Europe and the Head of Taxes International.
Close collaboration and cooperation between the UK Tax Department, led by the Head of UK Tax, and the CFOs of the UK Group businesses is controlled and maintained via an Activity and Responsibility Matrix. This sets out clear definitions of the role and functions undertaken by the UK Tax Department, the Group Tax Department and the UK Group finance teams.
The UK Tax Department maintains policies, procedures and processes to enable the timely and accurate completion of all tax returns and thus ensure tax compliance throughout and on behalf of the UK Group.
Approach to Tax Planning and Tax Risk
The UK Group adopts a conservative approach to tax planning, consistent with the approach adopted throughout the DPDHL Group. We make use of incentives and reliefs to minimise the tax costs of conducting business activities, but we do not enter into artificial arrangements designed to avoid taxation or defeat the intended purpose of tax legislation. There is no formal definition of an acceptable level of risk, but there is no appetite within the Group for tax planning without commercial justification.
Tax risks arise in a number of areas, not least from uncertainty surrounding the interpretation of tax law. We take a responsible approach to managing our UK tax affairs and insist on full disclosure of all relevant transactions in our tax returns. Where errors or mistakes are discovered, these are promptly disclosed to HMRC.
The UK Tax Department consists of qualified, experienced and dedicated tax professionals and is generally able to manage the UK Group's tax risks without the involvement of external tax advisers. However, from time to time we will seek external tax advice on specific projects or transactions (e.g. acquisitions and disposals) or where specialist technical input is required (e.g. tax credits for research & development expenditure).
We connect across the organisation to achieve quality and service excellence.
We connect the UK Group by providing tailored tax advice, guidance and support to the UK businesses whilst seeking to foster a close, open and constructive relationship with HMRC.
Approach to Dealings with HMRC
The UK Group has an open and professional business relationship with HMRC. Regular meetings and telephone calls are held to discuss issues in real time and to attempt to resolve disagreements or areas of dispute without the need to refer to the Courts (although such referral remains a course of action to both sides).
The annual business risk review meeting is usually attended by senior tax colleagues from the Group's head office in Germany as well as by senior figures within HMRC who we appreciate wanting to gain a better understanding of our business operations. More frequent meetings and telephone calls take place throughout the year as required.
The size of the UK Group and the wider group structure means that the UK Group is unlikely to be seen as "low risk" by HMRC. However, we continue to work with HMRC to ensure we are as close to "low-risk" as possible.
Tax Risk Management
All decisions involving significant tax risks are signed off at a suitable level within the Group Tax organisation and if appropriate by the Group CFO. Whilst UK tax risks are generally managed locally by the UK Tax Department, there are a number of Group controls and processes in place which apply to all companies in the worldwide Group. Regular reports are provided to the Group Head of Tax, the main Group management board and to other senior Group and Divisional managers as appropriate.
At a local level, UK tax risks are also discussed with senior UK management (usually through the local CFO), so that the local board of directors is kept aware of tax issues and risks within the UK Group, and the measures taken to mitigate these risks.
By working closely with the UK Group businesses, the UK Tax Department ensures that they are involved in all major transactions and projects that might give rise to tax risks. The UK Tax Department has a high profile within the UK organisation.
We grow by finding and capturing new opportunities.
We grow in line with the needs of our businesses through the continuous professional development of a qualified and dedicated in-house UK Tax Department in order to maintain and build upon our strong working relationship with the UK Group.
All members of the UK Tax Department undergo continuous professional development through attendance at external courses and seminars, participation in webexes and online training, and through internal courses and training as appropriate. In addition, the team has access to a wide range of tax resources, including tax magazines and journals, regular updates from the Big 4 and other accountancy firms and other online resources.
In addition to tax technical training, the UK Tax Department fully participates in the group-wide "Certified" initiative. This is a modular programme ranging from basic Group and industry knowledge to specific skills associated with each operating division and function.
Individual development opportunities are explored at annual appraisal meetings, along with career aspirations and succession planning, with an emphasis on continuous improvement throughout each year.
We seek to maintain a suitably qualified and experienced team of dedicated tax professionals to provide a high quality tax service to the UK group as well as ensuring full compliance with all tax laws and regulations. As the UK Group's businesses grow, so the UK Tax Department seeks to focus on improving efficiency and effectiveness to continue to deliver the same standard of professional tax advice.
We support the UK Group's businesses in fulfilling their own strategies as they tap new sources of growth and deal with changing customer needs.
We adopt and follow OECD guidelines for multinational enterprises and support initiatives to improve international transparency on taxation, including transfer pricing, country by country reporting and the automatic exchange of information by tax authorities. We are constantly adapting as new measures are introduced and strive to become a best in class corporate citizen.
The publication of this UK Tax Strategy complies with the requirements of Finance Act 2016 Schedule 19 paragraph 16(2) for the financial year ending 31 December 2019 and remains in force until superseded. It applies to all UK entities in the Deutsche Post DHL group, the head of which is Deutsche Post AG.