Introduction to the UK tax strategy
The UK Tax Strategy is focused on ensuring that the Hitachi Group UK companies’ taxes and tax risks are managed to provide a sustainable outcome within the parameters of Hitachi’s strategic and commercial objectives. The UK Tax Strategy covers the below areas:
- Approach to Risk Management and Governance
- Attitude to Tax Planning
- Level of risk the Hitachi Group UK companies are willing to accept
- Approach of the Hitachi Group UK companies towards HMRC
UK Tax Strategy Statement
(1) Approach to Risk Management and Governance
Our objective is to operate effective governance by implementing an effective tax control framework with an ongoing monitoring process to ensure key tax controls operate to mitigate tax risk to acceptable levels. The global tax rules were introduced as the general rules for risk management and governance to which all Hitachi Group companies must adhere.
The global tax rules require all Hitachi Group companies to manage their tax affairs efficiently, continuously and proactively. These rules also require all Hitachi Group companies to have systems, processes and controls in place that enable them to comply with their tax obligations and identify, assess and manage tax risks. These processes and controls include having defined key roles and responsibilities for tax management appropriate to the size of the business. When and as needed, tax is discussed at the board level of the Hitachi Group companies. In the UK, Hitachi’s Internal Audit group performs annual JSOX (Japan’s Financial Instruments and Exchange Law) audits on the different group companies testing these systems, processes and controls, and providing assurance to the company’s management.
Given the diverse nature of taxation issues and enquiries from tax authorities, each Hitachi group company must evaluate the risks of taxation against the relevant rules and regulations in each country at that given time. If important issues are likely to arise, or have an impact on other group companies, then the company will report to both its parent company and the Hitachi, Ltd. Headquarter Tax Group.
(2) Attitude to Tax Planning
Under the Hitachi Group Codes of Conduct (the “Codes of Conduct”), Hitachi Group companies will always observe laws and regulations and act fairly in all circumstances. In addition, the companies will thoroughly implement the Codes of Conduct to ensure that all their business activities are conducted on the basis of corporate ethics and compliance, in accordance with “basics and ethics.”
Furthermore, as a matter of principle, Hitachi Group companies aim to comply with all relevant tax rules and regulations of the countries in which they operate, as well as with international standards of tax rules.
Hitachi Group UK companies aim to follow the letter and spirit of the law on all matters related to taxation. The tax implications of all significant transactions are thoroughly analysed, with the support of external tax advisors where necessary, and potential outcomes are determined based on the rules and regulations in force at the time.
When achieving the desired commercial result, the most tax efficient outcome will be considered; however, Hitachi Group companies, as a responsible global corporate citizen, we do not engage in any form of aggressive tax planning. As a general rule, any tax planning is aligned with commercial business activities, and the final decision should be based on the commercial needs of the company or group.
(3) Level of Risk that the Hitachi Group UK companies are willing to accept
Just like other businesses, each Hitachi Group UK company has its own inherent level of tax risk that it is willing to accept. Nevertheless, as per the global tax rules, Hitachi Group companies are required to put in place measures to enhance tax risk management.
As a general practice, Hitachi’s appetite for risk is low. Hence, in uncertain situations, Hitachi Group companies will seek external tax advice to assess the potential risks of the relevant transaction.
(4) Approach of the company toward HMRC
Hitachi Group UK companies aim to make accurate and timely disclosures in tax returns and other documents submitted to HMRC. In addition, the companies will respond in a timely manner to any enquiries raised by HMRC, and provide any necessary information as required for such enquiries.
Hitachi Group UK companies aim to act in a trustful and cooperative manner when dealing with the tax authorities as specified in the global tax rules. For these purposes, the companies will proactively manage their relationship with HMRC.
