UNITED KINGDOM – MANDATORY DISCLOSURE – STATEMENT ON TAX STRATEGY
The Parliament of the United Kingdom, in Finance Act 2016, has implemented a requirement that certain companies, including Cogeco Peer 1 (UK) Ltd (“CP1UK”), publish annually a statement of their tax strategy. This statement is intended to meet the requirements of Schedule 19 of the Finance Act 2016.
This document, approved by the board of CP1UK, sets out the CP1UK strategy and approach to conducting its tax affairs and dealing with tax risk and covers only UK operations that are all managed through CP1UK. The document will be reviewed periodically by the CP1UK board. It is effective for the year ending August 31, 2018.
The range of UK taxes that CP1UK pays includes corporate income taxes, indirect taxes (VAT, land tax), employment taxes (PAYE, national insurance) and other applicable tax matters.
As a member of the Cogeco Inc group of companies (“Cogeco”), the CP1UK tax strategy is carried out in coordination with Cogeco Tax Department professionals to ensure that:
- The tax strategy is adopted and followed consistently throughout Cogeco;
- The tax strategy is aligned with Cogeco’s overall approach to corporate governance and risk management; and
- Cogeco and its subsidiaries pay, on a timely basis, the correct amount of tax required of them under the laws of the countries in which they operate.
As the leadership of the Cogeco Tax Department is located in Canada, CP1UK utilizes professionals from reputable international accounting firms to assist with identifying and resolving UK tax issues resulting from legislative or business changes, and for the preparation of income tax filings in the UK. The Cogeco Tax Department consults regularly with such outside professionals to ensure that the necessary facts and circumstances have been communicated to such third parties to allow for proper resolution of issues and correct completion of returns. All tax returns are reviewed and approved by either the Cogeco Tax Department or CP1UK’s management prior to filing.
CP1UK TAX STRATEGY
As a subsidiary of Cogeco, CP1UK is committed to conducting its tax affairs in accordance with the following objectives:
Commitment to Compliance
CP1UK makes every effort to comply with UK laws, regulations, rulings, and information reporting requirements on a timely basis. This includes remittance of the correct amount of tax on a timely basis and disclosure of all relevant information to the taxing authorities.
CP1UK will utilize tax incentives or opportunities to minimize the tax costs of its business, but will not knowingly use such incentives and reliefs in a manner which contradicts the intent of the policy objectives of the governments which introduced the incentives or the business and operational objectives.
Attitude Concerning Tax Planning
In structuring its commercial activities CP1UK will consider, among other factors, the UK tax laws with a view to value creation on a sustainable basis for its shareholders. Any tax planning undertaken will have commercial and economic substance. All tax planning activities will be conducted in accordance with the guidelines set forth in the Cogeco code of ethics.
Transactions between group companies are on an arms-length basis and arm’s length transfer pricing is utilized.
Accepted Level of Tax Risk
CP1UK’s on-going approach to UK tax risk management and governance is based on the principles of reasonable care and materiality. CP1UK maintains on-going application of governance with strong internal controls in order to substantially reduce risk to materially acceptable levels. CP1UK will ensure that the tax strategy is aligned with Cogeco’s overall strategy and approach to risk management, is consistent with the CP1UK vision, mission, and values, and is approved by the appropriate level of management. CP1UK’s appetite for tax risk is low and it only structures its affairs based on sound commercial principles and in accordance with the Cogeco policy and relevant tax legislation. Aggressive tax planning is not proactively considered and external advice is sought where appropriate.
Approach to Dealing with HMRC
CP1UK is committed to the principles of openness and transparency in its approach to dealing with HMRC. All dealings with HMRC and other relevant bodies will be conducted in a collaborative, courteous and timely manner. CP1UK seeks to foster positive and professional relationships with HMRC based on honesty, integrity, transparency and collaboration.
Any inadvertent errors in submission of tax returns and tax computations to HMRC are fully disclosed as soon as reasonably practicable after they have been identified.
Risk Management and Governance
The company operates within a group wide risk management framework, with comprehensive policies and procedures, which includes the management of tax risks.
Tax risks are assessed on a case by case basis, allowing CP1UK to arrive at well-reasoned conclusions on how each individual risk should be managed. Where there is uncertainty in how the relevant tax law should be applied, external advice may be sought to support the CP1UK’s decision making process.
Ultimate responsibility for UK tax strategy and the UK management of tax risk rests with CP1UK’s board of directors, with delegated day-to-day responsibility for its tax functions performed by the Cogeco Tax Department and CP1UK management. CP1UK management reports tax issues to the Cogeco Tax Department, which in turn reports to the Cogeco CFO and Cogeco board of directors.