We need to talk… about tax has been saved
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We need to talk… about tax
Over recent years, public interest in the tax affairs of large companies has increased. Some businesses have responded by making voluntary statements about their approach to managing their taxes. Regulators are joining the trend too – particularly in the UK, where legislation requires certain companies to publish statements describing their tax strategies as they relate to UK taxation. Statements must include details of risk management and governance, tax planning, the level of risk that the company is prepared to accept, and its approach to dealing with HMRC.
Preparing these statements can be a challenging process, with financial penalties for not publishing information accurately or on time, not to mention the reputational risk if the organisation gets it wrong. IMI plc, a global engineering firm, wanted to do it right.
Making a statement
So IMI asked us to help them to understand the tax transparency environment so they could tackle this new agenda head on. ‘Transparency’ is one of the four core principles that shapes IMI’s tax policy. With decentralised operations employing 11,000 people across more than 50 countries, this meant a significant organisational challenge in addition to tackling the legislative requirements, tax authority expectations and emerging industry norms.
IMI were keen on going beyond the limited UK requirement. They wanted to make a global statement within their annual report that reflected their values, so we helped the group assess its governance and tax risk management frameworks to ensure it was reflecting the good practice expressed in its external statement.
After compiling a picture of the regulatory requirements that applied to IMI’s global business and helping to draft the necessary stakeholder communications, we helped the client deliver on its promises. We identified ways to do things more efficiently and with greater visibility over key risk areas, providing pragmatic recommendations as to how those changes could be achieved.
Being transparent about taxes
As a result, IMI can be confident that it is meeting its legislative requirements with its tax statement, as well as providing clarity on what it is achieving from its tax management efforts both internally and externally. Not only that, IMI is also using its tax policy to inform its business strategy, turning what could be an administrative task into an opportunity to demonstrate responsible tax behaviour and the value that tax derives for the business.
At Deloitte, we welcome this approach. Multinational companies should be able to prove that their tax strategy is appropriate for each of the territories in which they operate if they are to gain the trust of key stakeholders and show the wider public they are doing business responsibly.
Peter Mason, Group Tax Director at IMI, commented: "With Deloitte's help, we have enhanced IMI's open communication on tax policy, building trust with all stakeholders."