Canary Wharf Group Investment Holdings plc – Tax strategy[1]

Taxation as a REIT

The Group became a real estate investment trust (“REIT”), which is an internationally recognised regime for investing in real estate, on 29 March 2018.

As a REIT, profits in respect of our UK property rental business are exempt from UK corporation tax, provided that we meet a number of conditions including obligations to distribute at least 90% of our annual profits from our UK property rental business to our shareholders as a property income distributions each year.

The Group is also subject to a number of taxes in the same way as non-REIT companies including: Corporation Tax on non-REIT income and gains; Stamp Duty Land Tax or the local equivalent; PAYE; Employer’s National Insurance; Business Rates; irrecoverable VAT; and various environmental taxes.

Approach to risk management and governance arrangements in relation to UK taxation

The effective assessment and management of risk (including tax risk) is key to the delivery of our strategy. The Board of Directors has responsibility for establishing the group’s appetite for risk based on the balance of potential risks and returns in achieving its strategic objectives and has overall responsibility for identifying and managing risk. Risk management is embedded in our culture, and employee training.

The Chief Finance Officer (‘CFO’) is the Board member with executive responsibility for tax matters and our appointed Senior Accounting Officer.  The CFO and Director of Tax provide quarterly Tax reports which includes material tax issues and risks to the Board.

Day-to-day management of the Group’s tax affairs is the responsibility of the Director of Tax who reports directly to the CFO.  The tax team is led by the Director of Tax, and to meet our commitments we seek to employ appropriately qualified professionals and ensure that appropriate training is provided for employees involved in tax process.

Management of tax risk is achieved through:

  • The audit committee whose key responsibilities include the monitoring and review of the effectiveness of our internal control and risk management framework and overall approach to monitoring areas of risk, including prevention of the facilitation of tax evasion;
  • Working with business units to ensure that the Director of Tax is aware of strategies and transactions at an early stage so that the tax consequences and risks can be identified and managed;
  • Monitoring changes in tax legislation and practice so that the effects can be taken into account;
  • Maintaining systems and controls to ensure that tax returns are accurately prepared and submitted in accordance with statutory time limits;
  • Ensuring that other finance functions are aware of and take into account relevant tax issues;
  • Reviewing financial statements of Group companies to ensure that tax disclosure is in accordance with relevant statute and guidance and that all matters of tax significance are identified and treated appropriately;
  • Obtaining advice from external consultants where necessary.

Our attitude towards tax planning

Responsible and commercial tax planning is undertaken where necessary so that transactions do not give rise to tax liabilities in excess of those required by law and double taxation does not arise.

The Group will not enter into any tax planning arrangements that it considers to be abusive.

The Group aims to comply with all relevant legislation and practice in relation to its tax affairs, paying taxes due that are commensurate with realised income, profits and gains and in accordance with law and practice.

The Group will seek appropriate tax advice from external advisors where:

  • Transactions are complex; and/or
  • The law applying to a particular transaction is uncertain; and/or
  • The amounts at stake are substantial.

Clearances may be sought from HMRC where possible.

Our relationship with HMRC and level of risk

The Group has a low tolerance for tax risk and committed to acting with integrity and transparency in all tax matters, and we have an open, up-front and no-surprises policy in dealings with HMRC. We are in regular discussions with our customer compliance manager at HMRC and HMRC are kept informed and are asked for pre-clearance where applicable in relation to complex areas and transactions.

In summary, The Group looks to minimise the level of tax risk and at all times seeks to comply fully with its regulatory and other obligations and to act in a way which upholds its reputation as a responsible citizen.

[1] This strategy published on 26 April 2021 applies to Canary Wharf Group Investment Holdings plc and all the members of its group subject to UK tax (“The Group”), and meets the  requirements of paragraph 16(2) Schedule 19 to the Finance Act 2016 in respect of the accounting period ended 31 December 2020.