Our tax strategy supports the way we do business, our culture, and how we conduct our own affairs. It underpins our Purpose and influences the decisions we make.
We operate a robust culture which is encapsulated within our code of conduct. This culture is built on ethics, individual responsibility and integrity to do the right thing. These principles provide the strong bedrock for how we conduct our own affairs, including our tax affairs, as well as how we work with our clients.
Our corporate sustainability agenda has also helped frame our tax strategy. This agenda is founded on the following guiding principles:-
Measuring our contribution to the UK economy is important to us. For 2019 we have continued to focus on our Total Tax Contribution as our key measure, both in terms of taxes we have paid, and taxes we have borne.
Our Total Tax Contribution data for our last three financial years are detailed below.
For our year ended 30 June 2019, we contributed £1,265m in UK taxes to the UK public finances, made up of £505m in taxes borne and £760m in taxes collected. People are essential to our business and our Total Tax Contribution reflects this. Taxes borne of £505m include Partner income tax and national insurance contributions payable on distributable profits together with employer national insurance contributions and business rates. Taxes collected of £760m include national insurance contributions collected from employees and net VAT collected from customers.
Approach to managing risk and developing good governance in relation to taxation
We are committed to being a responsible and compliant taxpayer in the countries where we operate and we do this through robust governance, and clearly defined processes and controls.
How we structure our affairs
Managing risk in relation to taxation
We have developed a detailed framework of internal controls to provide a robust and comprehensive approach to managing risk in relation to the taxation of our own affairs. This framework is structured to deliver a level of governance and oversight which is consistent with the standards we adopt to our work when undertaking our broader client engagements.
This detailed framework is based on the six elements of internal controls and internal quality controls.
The framework, along with our other financial and operational systems, are subject to a rolling independent review by our internal audit team with results reported to our COO and Executive Board.
Our robust and comprehensive approach to managing risk in relation to tax is underpinned by:
Our Partners are also required to conduct their personal affairs in a way which is aligned with our Code of Conduct.
Dealing with tax authorities
We engage openly and constructively with HM Revenue & Customs on matters relating to our tax affairs. We share information about our commercial developments or transactions, especially where there are complex tax treatments. Where necessary we will seek formal or informal clearance from HMRC on uncertain tax positions insofar as they relate to our tax affairs.
Tax can be very complex so we approach our obligations with an appropriate level of analysis and consideration. Where we cannot reach agreement with HMRC on the proper interpretation of law, and there is no other practical means of achieving agreement, we may test the matter in the Courts. We aim to collaborate appropriately with HMRC on the conduct of such actions.
Our tax strategy defines our approach to managing our own tax affairs. It, along with our underlying operational governance in relation to our tax affairs, has been approved by our Chief Operating Officer and is subject to periodic review by our Executive and Supervisory Boards.
This tax strategy is published by PricewaterhouseCoopers LLP and the group of UK companies primarily held through its wholly owned subsidiary, PwC Holdings (UK) Limited.
Our strategy is compliant with the requirements of para 16(2) and 25(1) of Schedule 19, Finance Act 2016 and relates to our 30 June 2019 year end.