Li & Fung Group – UK Tax Strategy
Li & Fung Limited specialises in the management of global supply chain for brands and retailers around the world. The customers of the group include department stores, hypermarkets, specialty stores and chain shops located globally.
The purpose of this document is to provide an overview of the approach to tax of the Li & Fung Group.
This tax strategy document is published in accordance with Schedule 19 of the UK Finance Act 2016 by Li & Fung Limited in respect of all the UK entities within the Group (“Li & Fung” or “UK Group”). This document has been approved by the directors of the UK Group and will be reviewed and where necessary, updated, on a periodic basis.
Approach to Tax and Tax Governance
Li & Fung’s approach to tax is based on compliance with our reporting requirements and adherence with the relevant tax laws and regulations to pay the correct amount of tax, making use of government offered reliefs where applicable, with a view to deliver value to our shareholders.
The following covers Li & Fung’s (A) Governance towards compliance and reporting (B) Attitude/approach towards tax planning and risk management and (C) Approach towards working with HMRC.
Governance towards Compliance & Reporting
In accordance with Li & Fung’s Code of Conduct and Business Ethics, employees are required to ensure all transactions are properly included in the books and records. All accounting information must be reliable so that it can be used for preparation of financial statements, statutory audit and other compliance purposes.
As a major subdivision of a Hong Kong listed company, the UK Group are well aware of the importance of compliance with the relevant tax laws, obligations and tax practices regarding the tax filing and payment of taxes.
The UK Group engages with professional tax advisors to ensure tax compliance. In addition to our own research and training, we expect our professional advisors to ensure the UK Group are kept fully informed of the latest development of tax regulations and to ensure all transactions, as well as tax returns, are compliant with the relevant laws and regulations.
The Senior Accounting Officer (“SAO”) and local finance team in the UK, which is made up of appropriately qualified individuals, are responsible for the tax compliance matters of the “UK Group”, and have implemented controls and processes to manage this process. The tax matters of the “UK Group” are closely monitored and scrutinised by the Corporate tax team in Hong Kong, which comprises of experienced tax professionals. Major tax issues are also discussed and addressed during Audit Committee meetings.
The Group’s Attitude/Approach towards Tax Planning and Risk Management
Li & Fung does not implement aggressive tax planning where the sole or dominant purpose is to obtain a tax benefit. Business structures and transactions are planned and designed to reflect the commercial requirements and cater to the operational needs of the group, although tax efficiency may also be taken into account as part of the planning/design process.
As the group has strict governance on compliance and reporting, the “UK Group” is not permitted to take material tax risks or expose the Global Group to uncertain tax positions. As such, whenever the group deals with any significant transactions or when they experience uncertain tax positions, the “UK Group” seeks advice from professional tax advisors and obtains consent from the Corporate office in Hong Kong.
The Group’s Approach towards Working with HMRC
The “UK Group” seeks to maintain an open and honest relationship with HMRC, in particular with our allocated Customer Relationship Manager (“CRM”). The SAO and local finance personnel regularly meet with the CRM to update HMRC on the latest business developments and key transactions of the “UK Group”.
Where there is uncertainty in the interpretation of tax regulations and other questions relating to current tax practices, we take advice from professional advisors, and where appropriate, seek advice from HMRC to gain certainty on the approach taken.