Essentra Tax Strategy

As a responsible corporate citizen, Essentra aims to act in a socially responsible manner at all times in accordance with Essentra’s Corporate Social Responsibility. Our tax strategy is an important part of delivering these values.

General approach and commitment to compliance

Essentra aims to achieve high standards of transparency and responsibility in dealing with its tax affairs, and to comply with tax laws and practice in all of the territories in which we operate. Compliance for us means paying the right amount of tax in the right place at the right time, and making relevant disclosures to tax authorities to allow them to determine that the right amount of tax has been paid in the right place at the right time.

Day-to-day tax matters are delegated by the Board to the Group Head of Tax and the Group Finance Director and overseen by the Audit and Risk Committee. Essentra’s approach to tax risk is set by the Board.

Our approach to tax planning

Essentra’s Code of Business Ethics requires that we adhere to the letter and spirit of all laws and regulations that govern our business. As such, Essentra does not undertake artificial tax planning which has no commercial purpose or which has an outcome that is contrary to the intentions of the relevant government. Consideration of tax planning will also have due regard to the potential impacts on our reputation and relationships with key stakeholders.

Essentra will consider and respond to legitimate tax incentives and reliefs in the countries in which we operate.

In line with our responsibilities as a multinational group, intercompany transactions are set on an arm’s length basis and in line with OECD principles and reporting requirements.

Attitude to tax risk

Given the scale of Essentra’s business and the variety and complexity of the tax regimes in the jurisdictions in which we operate there is a level of inherent risk associated with tax, which we are committed to managing and minimising.

In line with the Board endorsed controls culture we seek to proactively identify, evaluate, manage and monitor such tax risk.

Where appropriate, for example where there is significant uncertainty or complexity, we will work with specialist tax advisors to obtain independent advice and we may liaise with tax authorities to obtain greater certainty where this is possible.

Working with tax authorities

As a UK headquartered group we seek a particularly co-operative and transparent relationship with the UK tax authority (HMRC), with regular dialogue carried out through the proper channels. This allows us to provide business updates, seek clarification on UK tax laws, offer input into UK law consultations and address any open enquiries or general questions.

In our interactions with HMRC we seek at all times to adhere to their published principles of ‘co-operative compliance’ which describe the framework within which HMRC seeks to work with large business. Co-operative compliance as a broader OECD concept also underpins the manner in which we look to develop and maintain professional working relationships with all tax authorities.

Where tax audits are opened, we aim to engage with tax authorities in a proactive and prompt manner in order to fairly resolve the matters under review. Where we disagree with a ruling or decision of a tax authority or court, we will first seek to resolve any disputed matters through proactive and transparent discussion and negotiation.

Governance and monitoring

The tax landscape, general business environment and business operations continuously evolve and so our approach to tax risk management and the tax strategy will be reviewed at regular intervals and amended if necessary. Any amendments to this tax strategy may be suggested by the Group Head of Tax, the Audit and Risk Committee or the Group Sustainability Committee but in any event any changes will need approval by the Board.

The Essentra staff responsible for tax, which include the Tax Department as well as other staff involved with tax as part of their day-to-day duties, are subject to internal and external audit reviews. Regular tax updates are given to the Group Finance Director and Audit and Risk Committee by the Group Head of Tax.

UK tax legislation

Publication of this tax strategy is regarded as complying with the duty under Paragraph 16(2), Schedule 19, Finance Act 2016 in respect of the period ended 31 December 2020.

Approval

The tax strategy is approved annually by the Board of Essentra plc and was most recently approved on 27th February 2020.