We set out below our tax principles as they relate to the Group’s financial year ended 31 December 2018. We believe these principles are based on good corporate practice in the area of tax management and tax transparency, balancing the interests of our stakeholders. These principles comply with our duty under Section 16(2) Schedule 19 of the Finance Act 2016.
The tax principles set out our tax governance framework and our perspective on tax risk. Adherence to the governance framework helps to protect JLT against the impact that taxation risk may have on the Group’s future value creation.
1. The JLT Group will comply with its tax obligations (including making all appropriate returns and payments) worldwide and will only engage in tax planning that is aligned with the commercial and economic activity of the Group.
2. The Group will follow the terms of relevant Double Taxation Treaties and corresponding guidelines (eg the OECD) for international tax matters.
3. The Group will maintain an open and transparent relationship with HMRC, raising issues on a real time basis through regular face to face meetings and telephone calls. The Group also works with trade bodies such as LIIBA in the UK when engaging with tax authorities to help develop their expertise and understanding of our industry.
4. The Group will utilise tax incentives or opportunities for obtaining tax efficiencies where these:
- Do not carry significant reputational risk or significant risk of damaging the Group’s relationship with the fiscal authorities in the key jurisdictions in which the Group operates;
- Are aligned with the intended policy objectives of the Governments which introduced the incentives; and
- Are aligned with business or operational objectives of the Group.
5. The Group will not use artificial or aggressive structures that are intended for tax avoidance, have no commercial substance and do not meet the spirit of local or international law.
6. The Group will not use tax havens for the purposes of tax avoidance.
7. The Group will consider tax as part of every major business decision.
8. The Group will manage tax risk in such a way as to ensure that key risk areas are monitored and material risks minimised. This includes Board oversight.
Accountability and Governance
The Group ensures that, as a business, it has mechanisms in place to adhere to the above principles and provide both relevant training and opportunities for employees to raise any issues of concern on a confidential basis and in accordance with the Group’s wider governance practices.
The Board receives reports on the Group’s tax strategy and also regular updates on tax regulation and key tax challenges faced by the Group.
Written reporting on key tax matters is provided to the Group Executive Committee monthly.
The JLT Group Tax team forms part of the Finance function and the Group Head of Tax reports directly to the Group Chief Financial Officer. A full time Group Tax team consists of specialists across a range of tax disciplines and frameworks, and is augmented periodically by external advisors on material transactions.
The Group Tax function actively fosters open dialogue with its internal stakeholders to ensure that the taxation implications of business decisions are fully evaluated, understood and implemented. This helps to mitigate the risk to the Group across a broad range of taxation matters.
Managing Tax Risk
As a business operating across over 40 jurisdictions the Group is subject to tax in these countries. The tax legislation applicable in these countries differs and is often complex and subject to interpretation. Recent developments in international taxation have increased the likelihood of changes to tax systems in these countries, which creates uncertainty for the Group.
The risks are managed through bi-annual collection of data on all the Group’s corporate income tax exposures and provisions and confirmation that all tax positions are in compliance with the Group’s Tax Principles. The Group Tax function also maintains regular communication with the Group’s overseas businesses to ensure continued compliance with tax obligations. This is achieved, in part, through the use of tax compliance calendars both in the UK and overseas through which the Group centrally monitors the filing of all tax returns and related tax payments.
Throughout the 2018 financial year, the Group has continued to acquire other companies whose service offerings complement those of JLT. Extensive due diligence is undertaken on potential targets to ensure that their taxation compliance history is robust and in accordance with the Group’s own approach to taxation.
Tax Risk Framework
||Transactions and behaviours are not in line with Group Tax Principles
Annual compliance confirmation.
Review of all material transactions by the Group Tax function.
|Governance and Organisation
||Lack of organisational structure to implement tax strategy
||The Group Tax function regularly reviews the Group’s organisational structure.
||Insufficient tax training
||Regular training sessions for Group Tax and Finance functions and personal development plans.
|Compliance and Documentation
||Failure to comply with statutory tax obligations
||Compliance tracking tool and annual compliance checklists.
|Reporting and Risk Management
||Tax positions not accurately reflected in reporting
||Tool used to collect direct tax exposures and provisions, which are reviewed and approved by the Group Tax function.