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Approach to Tax

The following statement complies with the requirements of Finance Act 2016 for large groups to make their tax strategies available to the public.

The South Staffordshire Group (‘the Group’) takes seriously its legal and social responsibilities for meeting its tax obligations. The Group currently has no material operations outside the United Kingdom, and therefore the following has specific reference to UK taxation, although the same principles are applied in other jurisdictions where applicable.

The Group is committed to complying with tax laws in a responsible manner, balancing its obligations to the Government and the public with its duty to manage its affairs efficiently in order to deliver cost-effective services to its customers while generating an economic return to its investors. We make timely and accurate tax returns that reflect our fiscal obligations to the Government.

In particular:

  • - We will not engage in tax planning that is not aligned with commercial and economic activity;
  • - We will not engage in artificial tax arrangements;
  • - We will seek to maintain a transparent and collaborative relationship with HM Revenue & Customs, principally through our Customer Relationship Manager;
  • - We will seek independent professional tax advice on material matters where the application of tax law is complex or uncertain.

The Group will make use of applicable tax incentives provided by the Government within the framework outlined above. These may include, for example, preferential rates of capital allowances or enhanced tax relief for research and development costs and certain designated capital assets that add efficiency to the Group’s operations. Such incentives have been put in place to encourage appropriate business investment.

It should be noted that, for our regulated water supply business, such incentives will generally have the effect of reducing our customers’ water bills under the funding model adopted by the Government and the economic water sector regulator, Ofwat.

In addition to corporation tax, the Group contributes significantly to the UK Exchequer by means of a number of other taxes and levies, including but not limited to:

  • - Employment taxes, National Insurance and the Apprenticeship Levy
  • - Carbon taxes and other energy-related taxes and levies
  • - Fuel duty and other vehicle-related taxes
  • - Business rates
  • - Stamp duty on property and share transactions
  • - Regulatory charges and licences such as water abstraction charges

The Group’s approach to risk management applies to tax as it does to other business areas. This includes identifying, assessing and managing tax risk, with significant issues escalated to the Group Chief Financial Officer, Group Chief Executive and/or the Board for consideration. The Group Internal Audit function will review significant risk areas where considered appropriate.

The Group has identified economic uncertainty as a significant risk area. This includes risk in relation to the possibility of unexpected tax law and policy changes by the Government. The Group carefully monitors published tax legislation, guidance and policy documents to ensure it can assess the compliance requirements and the economic implications for the Group. The Group will engage with HM Revenue & Customs where its tax position is likely to be materially affected by such policy changes.

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