Group Tax Strategy for the financial year ended 31 March 2024
This tax strategy is drafted with the main purpose to document and communicate our Group policy with respect to the management of tax within AO World Plc and all its subsidiaries. As a group we see the management of taxes as key to ensuring that consistent and effective standards are maintained across the Group and to ensure our reporting and compliance obligations are met within the UK.
Our Business Model
The AO Group (AO World plc and its subsidiaries) is a leading online electrical retailer. Our mission is to become the destination for electricals in the UK. We have a set of core values which underpin everything that we do as we strive towards this mission:
- We treat every customer like our gran
- We make decisions that make our mums proud
- We have a growth mindset
- We operate at AO speed
Our activities are subject to a variety of business taxes, including corporate income taxes, employment taxes, indirect taxes and other taxes. We consider it essential that our tax strategy serves our overall mission, in order to minimise risk and uncertainty and to provide a stable tax environment to support the business in achieving this. Our tax strategy is to:
- Manage our tax affairs responsibly with integrity and transparency
- Pay the right amount of tax at the right time
- Comply with all applicable tax filing obligations in a timely manner
We will continue to review the tax strategy to ensure that the tax strategy is aligned with the Group’s mission on a regular basis.
Our approach to UK tax risk management and governance
The AO World plc Board is responsible for approving the AO Group Tax Strategy. With delegation from the Board, performance of the business in adhering to the tax strategy and management of tax risks ultimately rests with the Group Chief Financial Officer, (“CFO”), who is also the Group’s Senior Accounting Officer, (“SAO”).
Day to day responsibility for the operations is delegated to the Group Finance Director, who in turn delegates this to the Group Tax team. The Group Tax team proactively partners with the wider AO business to provide commercial tax advice in respect of all business projects and transactions, ensuring that decisions are being made in line with the tax strategy. Where appropriate, targeted training is delivered to specific business areas to further this adherence.
A review of all tax processes is undertaken at least annually in order to support the filing of the SAO certificate, and tax policies, processes and risks are continually monitored to ensure appropriate action is taken and subsequent progress monitored. Regular meetings to discuss all relevant tax matters are held with the SAO, and where appropriate with the Board due to materiality and/or complexity.
Our ongoing tax risk approach is based on principles of reasonable care and materiality. All tax risks are documented on our internal tax risk register which is updated regularly. Once a tax risk is identified, it is given a risk rating on both inherent and residual risks using the same method used for the overall Group risk register. This consistency provides an escalation framework and overall visibility of the risks to the risk management committee and the Board. Once a risk has been identified, we work with all relevant functions in determining the actions or controls required going forward to manage those risks.
In addition to this, the Group Tax team undertakes periodic reviews on the internal and external systems, and processes and controls used in our tax calculations to ensure they are appropriate and can be relied upon.
We believe in keeping things simple and doing what is right and fair. This applies to all of our stakeholders, from customers to employees, suppliers, shareholders and tax authorities. We aim to pay the right tax at the right time, ensuring that all reporting and filing deadlines are consistently met. Where there is an area of uncertainty, or where business demands exceed the capacity of the team, we will obtain specialist advice from reputable tax specialists. We develop good professional working relationships with all external advisors.
We are committed to the ongoing development and enhancement of our internal tax function professionally and personally through the provision of additional training or resource as required.
Our approach to tax planning
We understand that tax management and tax policy play a role in operating a sustainable and responsible business. We ensure that all major business decisions and proposals are considered from a tax perspective to ensure a clear understanding of all tax consequences, supported with documentation of the facts, conclusions and risks involved. We are committed to acting with integrity and transparency on all tax matters, and complying fully with tax laws and regulations.
To maintain shareholder value, we will consider all relevant incentives, exemptions and reliefs which may help to minimise the tax costs of conducting the business activities. We do not engage in artificial tax arrangements with no commercial purpose.
Our level of risk we are prepared to accept for UK tax
We assess all risks on a case-by-case basis, taking into consideration the reputation of the AO Group, including our brand and corporate social responsibilities, and seek to take a diligent approach when assessing our bespoke tax risks. As such, we do not have a pre-defined threshold for an acceptable tax risk.
However, ultimately, we are committed to paying the right amount of tax at the right time, ensuring that all applicable laws are met with regard to tax. Consequently, where risks are identified or uncertainty arises around the interpretation of the tax legislation, we work with the business leaders responsible for the risk and consider the actions that need to be managed internally, and where necessary seek advice from external tax advisors or where appropriate from HMRC directly.
How we work with HMRC
We are committed to having a collaborative, transparent and professional working relationship with HMRC, consistently providing them with full disclosure of all appropriate and relevant information and discussing technical issues and uncertainties in real time.
We work closely with our Customer Compliance Manager at HMRC, proactively and regularly providing them with business and internal tax developments. It is important to us that we maintain this relationship, and in the event of a dispute we strive for early agreement on matters, and to achieve certainty wherever possible in an open, collaborative, and professional manner.
AO World Plc and its subsidiaries regards the above publication as complying with the requirements of Finance Act 2016, Schedule 19, paragraph 16(2) for the financial year ended 31 March 2024, and has been prepared in accordance with paragraph 17 thereof.