WEX Europe Services Limited
UK Tax Strategy
In accordance with Part 2 of Schedule 19 Finance Act 2016, the following U tax strategy applies to all UK tax resident companies and permanent establishments of the group of companies headed by Wex Europe Services Limited (“WES”), being a UK sub-group within a larger Multinational Enterprise (“MNE”) as defined by the OECD Transfer Pricing Guidelines.
WEX Europe Services Limited, its UK subsidiaries and permanent establishments are members of a global group under the ultimate, majority ownership of WEX, Inc. that is a US multinational corporation.
WEX Europe Services Limited, as head of the UK sub-group, is responsible for publication of this UK tax strategy as a qualifying company and on behalf of all other UK subsidiaries in the UK sub-group.
WES in the UK is responsible for fulfilling its obligations in relation to the following taxes:
- Corporation tax (including chargeable gains)
- Value added tax
- Employer’s National Insurance contributions
- Stamp taxes or duties
It is also responsible for withholding taxes and taxes where it is required to deduct and remit to the UK tax authority, HM Revenue & Customs (“HMRC”). This includes the operation of Pay-As-You-Earn, deducting income tax and employee’s National Insurance contributions as part of the payroll process for UK employees.
WES is also responsible for the management of taxes relating to countries other than the UK; however, this tax strategy covers matters relating to UK taxation only.
Without reference to specific UK tax obligations, there are a number of tax risks for WES that could have one or more of the following outcomes without appropriate management:
- WES does not submit tax returns or similar documentation that are accurate and/or on time;
- WES does not settle its tax liabilities accurately and/or on time; and
- WES does not comply with other obligations relating to tax that are not described above.
The consequences for WES not fulfilling its tax obligations can include financial penalties for the relevant companies, but also other sanctions as prescribed under legislation.
The core objective of the WES tax strategy is to comply with all applicable tax legislation and obligations, including the timely delivery of any tax documents and timely settlements of tax liabilities.
WES must also consider the priorities of its stakeholders, which is set out for the directors of WES in the Companies Act 2006, specifically s.172:
“…a director must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.”
To this end, the directors of WES will take all of their legal obligations into account, alongside the company’s tax responsibilities. WES acknowledges that the success of its UK companies, while primarily viewed in commercial and financial terms, also refers to other concerns and responsibilities, including taxation.
The directors and employees of WES are therefore expected to make due consideration to all applicable legal and regulatory obligations, but a
lso consider the business’ reputation, corporate and social responsibilities.
The purpose of this document is to set out how we approach tax risk management, our attitude to tax planning, the level of tax risk that we are prepared to accept and how we work with HMRC, the UK tax authority.
Our approach to risk management and governance arrangements in relation to UK taxation
The Board of Directors for Wex Europe Services Limited is responsible for corporate governance, including how WES manages its tax risks as part of a wider framework.
The Board of Wex Europe Services Limited has directed the Group Finance Director (“GFD”) of WES to design and implement all processes required to identify tax obligations and deliver in accordance with the requirements of the relevant legislation or other statutory instrument. This includes the systems and staffing required to deliver against such obligations. The GFD highlights significant tax risks to the Board and recommends actions to mitigate such risks accordingly.
The GFD monitors all areas of potential tax risk with the senior members of the WES Finance team. Specific tax compliance tasks are delegated to certain members of the Finance team, depending on the level of experience required. WES maintains a close relationship with external tax advisors, who liaise regularly with the WES Finance team. The GFD reviews the performance of the WES Finance team, including tax compliance.
Our attitude to tax planning
WES defines tax planning as any form of planning, discussion or similar consideration where the implications of the proposed activities are assessed from a tax perspective. It is therefore broad in scope, but the Board seeks to provide a framework for WES management to distinguish between types of tax planning that the Board considers to be acceptable as compared to tax planning that is not acceptable.
The principle that guides this distinction is whether the outcome of the planning is aligned with the commercial and economic substance of WES (or the specific business area if applicable). WES will look to avoid structuring its tax affairs in a manner that is not consistent with this principle.
This could include situations where a reduction in certain tax liabilities is the only apparent benefit. In such circumstances, the Board wishes to be clear that its intention is to avoid such arrangements, particularly where there is a high risk of the arrangements being considered abusive. Abusive (for tax purposes) may be that reflective of the definition of certain tax legislation, but the Board may also consider a broader definition of what constitutes abuse (from a tax perspective) in certain situations, when taking account broader business considerations.
The Board wishes to highlight this specific area of tax risk as it may appear to conflict with tax legislation designed and/or intended to arrive at a sole tax benefit. An example of this situation of a sole apparent tax benefit (to be clear, which is considered acceptable tax planning to WES) is the application for tax grants or incentives, e.g. tax credits for activities considered to be research and development.
To this end, the Board has identified certain subject matter where there may be a greater risk of uncertainty in applying the principles above, notably:
- Changes in corporate or business structure (i.e. reorganisations);
- Intercompany transactions (particularly cross-border); and
- Business acquisitions or disposals.
Tax planning will be led by the WES Finance team and primary oversight with the GFD. The GFD will report significant matters with their tax implications to the Board. As part of the consideration for such processes, WES will seek external advice from tax professionals, and always in cases where there is insufficient knowledge on the subject matter and/or uncertainty on the application of certain tax law. In some circumstances, WES may approach tax authorities to seek clarity and WES will consider specific procedures for clearance in advance of transactions, where possible.
Level of risk in relation to UK taxation that WES is prepared to accept
As stated in the core objective, the overarching priority in this tax strategy is that WES will seek to comply with all applicable tax legislation and similar statutory instruments. All tax planning must take place with adherence to the principles set out above.
If a situation arises where, although the proposed outcome is considered to be aligned with the commercial and economic substance of WES, but there is uncertainty regarding tax compliance, then the situation should be resolved by seeking external, professional tax advice in the first instance.
As stated above, if uncertainty remains thereafter, an approach to the tax authority should be explored.
If uncertainty still persists despite the steps above, then management at WES must consider all relevant factors, noting that the preference of the Board of WES is to adopt a low risk approach to tax compliance and to avoid tax authority dispute. This may require WES management to seek Board approval in certain cases and to also consider a range of factors, such as the stated intention of HM Government in enacting the legislation and not just a literal interpretation of the statutory instrument (if not considered already).
Approach of WES towards its dealings with HMRC
WES seeks to develop co-operative relationships with tax authorities as it wishes to fulfil its core tax objective of complying with all applicable tax legislation and relevant instruments. WES believes that a pro-active approach to its tax affairs will help to minimise the risk of inaccuracies in its tax filings and errors in settling tax liabilities on a timely basis. As part of this, WES will endeavor to inform tax authorities on discovery of any errors or omissions in relation to tax obligations as soon after they are identified and the circumstances of their occurrence have been understood.
The purpose of this approach is to facilitate a relationship that is both open and honest, but also with the view to practical and demonstrable resolution, including steps to avoid future errors or omissions.
As part of its ongoing review of its approach to tax management, WES will consider whether any changes may be required, such as new systems, refinement to processes and staffing. WES will seek external, professional advice on preferred structures and processes to improve tax governance and risk management.
WES regards the publication of this document as complying with the duty under Schedule 19 of the Finance Act 2016 to publish its tax strategy.
This UK tax strategy was approved by the Board of Wex Europe Services Limited on 30th January 2020 and is hereby approved by the Roberto Simon as Chair and, evidencing acknowledgement by WES management, David Quinnell as Group Finance Director.
Roberto Simon David Quinnell
Chair Group Finance Director
On behalf of the Board of Directors On behalf of WES management
WEX Europe Services Limited WEX Europe Services Limited