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 each territory within which we operate.
For the purposes of this strategy, tax is taken to include all tax liabilities of the global group, UK or otherwise. UK tax specifically includes Corporation tax, Income tax, PAYE, Employee taxes, NIC, VAT, Insurance premium tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Customs & Excise Duties and Withholding taxes, the local equivalent taxes in both Germany and the Netherlands and any other taxes which may from time to time become applicable.
Our Business Model
As a business we believe in keeping things simple and this applies for all our stakeholders from Customers, to employees, Suppliers, Shareholders and Tax Authorities. We aim to pay the right tax in the right territory at the right time.
We are subject to corporate income tax in all territories in which we have a real economic activity and pay taxes based on the profits arising in these territories. Additionally to this, in our capacity as an employer of over 2,900 employees across 3 territories we collect income tax and social security taxes as well as employers’ taxes or their local equivalents. As an online retailer we also collect local sales taxes on the sales of our goods across all three territories in which we operate.
As a Multi-national Group we understand that the Groups’ tax complexity increases as a result of this international expansion, be it in relation to the international travel of our employees, additional tax registrations and requirements, or the need to remain compliant with the changing international tax landscape and European OECD guidance. In line with the strategy outlined below, it is the Groups desire to conform with the new requirements arising as a result of the European BEPS project and we work hard to ensure that we are aligned with the developing legislation, guidelines and requirements whilst appreciating the nuances between the local interpretation of the guidance and the uncertainty that this can give rise to.
As part of our Group strategy, we believe in doing what is right and fair. We care about our customers being happy with how we treat them, so that they continue to come back to us time and time again. We are on a mission to become the best European online retailer of electrical products.
Our tax strategy seeks to serve the overall Group strategy, enhancing shareholder value for our shareholders and ensuring that the tax obligations are managed effectively minimising risk and uncertainty for the business. We will continue to review the tax strategy to ensure that the two are aligned on a regular basis.
Our key objectives include:
- Maintaining integrity in respect of compliance and reporting
- Controlling and mitigating tax risks
- Enhancing shareholder value
In order to achieve the above, as a Group we will aim to:
- Observe all applicable laws, rules, regulations and legal requirements with regard to tax
- Ensure all reporting and filing deadlines are met
- Always consider the reputation of the AO Group, its brand and its corporate social responsibilities
- Ensure that all major business decisions are considered from a tax perspective, at the appropriate level and supported with documentation of the facts, conclusions and risks involved
- Commit to the ongoing development and enhancement of our internal tax function professionally and personally through the provision of additional training or resource as required to ensure it remains sufficient to deal with the growing complexities of the Group
- Develop good professional working relationships with external advisors seeking additional advice as appropriate from a specialist in the relevant field
- Develop a good collaborative professional working relationship with all tax authorities and in particular;
- discuss issues in real time, dealing with information requests in a timely manner; and
- adopt an open and co-operative approach providing full disclosure of all appropriate and relevant information
- In the event of dispute, to strive for early agreement on matters and to achieve certainty wherever possible
- To maintain shareholder value, the AO Group will consider all relevant incentives and reliefs which may help to minimise the tax costs of conducting the business activities, but it will not use them for purposes which are knowingly contradictory to the intent of the legislation.
Responsibilities & structure
Responsibility for the tax strategy, policies and management of tax risk ultimately rests with the Group Chief Financial Officer, with delegation from the Board. Day to day responsibility for the operations rests with the Group tax function with relevant assistance from the local finance teams.
Performance of the business in adhering to the tax strategy, policy and identifying risks is reviewed by the Group Chief Financial Officer who in turn reports to the Board. The Tax Strategy has been approved by the Board and any future changes to the strategy will also be subject to Board Approval.
The Group’s ongoing tax risk approach is based on principles of reasonable care and materiality. The tax risks are monitored through the use of a tax risk register on a regular basis, adding new risks as they arise and with responsibility and accountability clearly defined.
The risk register is designed to identify tax risks in a consistent matter, assessing the risks using standardised definitions and facilitating the monitoring and testing of controls. The risks are quantified using the consistent risk approach used for the overall Group risk register and therefore provides an escalation framework and overall visibility and oversight of the risks.
We seek to take a diligent approach when applying professional judgement in assessing the Group’s bespoke tax risks and in particular in determining the actions or controls required to manage those risks seeking external advice as required.
In assessing our tax risks the following points will be taken into account:
- Likelihood of occurrence after the application of existing mitigating controls
- Short and long term considerations of the risks including proposed legislative changes
- Impact on the Group – both financial and reputational and in light of our corporate social responsibilities
- Any consequences from disputes with the tax authorities, be it relational, financial or staff resource driven.
In making decisions, the Group seek to form approved technical positions when interpreting the law and its application to the business. In determining these assessments the business will assess whether external advice is required taking into account the following:
- Internal resource and capacity of the Group tax function
- The Group tax functions’ experience and knowledge in relation to the relevant tax legislation
- The quantum of tax at stake and the financial and reputational impact of error
At all times the business seeks to provide clear explanations of the positions and maintain thorough supporting documentation. As appropriate, the business will seek to discuss key tax sensitive issues or decisions in real time with the relevant Tax Authority.
AO World Plc and its subsidiaries regards the above publication as complying with the duty under Finance Act 2016, Schedule 19, para 16 (duty to publish a tax strategy) in the current financial year ended 31 March 2018.