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Tax strategy of the MHC UK Ltd Group

October 2017

 

SECTION 1: INTRODUCTION

1.1       Background

Mölnlycke Health Care is a world-leading medical solutions company, aiming to advance performance in healthcare across the world. The headquarters are in Gothenburg and the group is ultimately owned and controlled by Investor AB, a Swedish listed company holding stakes in a diverse range of businesses.

The UK market is the third largest within Mölnlycke’s world-wide activities, and all UK group companies are held under parent MHC UK Limited.

This document sets out the strategic tax objectives of MHC UK Limited and its subsidiaries (”the UK Group”) and satisfies the UK Group’s requirement to publish its tax strategy under Schedule 19 of the Finance Act 2016.

1.2       Ownership and approval

The Tax Strategy is approved by the Board of Directors of MHC UK Ltd.

The Mölnlycke Group Tax Director is responsible for leading the Tax Strategy, assisted by the UK Finance Director.

The Tax Strategy will be periodically reviewed and any amendments will be approved by the Board of Directors.

1.3       Scope

The UK Group is exposed to a wide range of taxes, including corporation tax, VAT, insurance premium tax and national insurance contributions. In addition, the UK Group has around 350 employees, generating a substantial further tax contribution to the economy through PAYE and NIC.

The Tax Strategy applies to all companies within the UK Group in terms of tax compliance and tax financial reporting.

 

SECTION 2: TAX STRATEGY

2.1       Summary

The UK Group is committed to paying the correct amount of tax required under the laws and regulations of UK tax legislation and practice. The UK Group takes a conservative approach to tax planning, and does not pursue aggressive tax planning arrangements.

The UK Group uses third party advisors to provide advice and guidance to help assess the tax risks and ensure its compliance with applicable laws, rules, regulations and disclosure requirements.

2.2       Risk Management

It is the policy of the UK Group to ensure that all tax positions taken are consistent with the core values of the group, which notably include respect for the environment and respect for people and communities. The policy ensures that the UK Group pays the appropriate amount of tax in relation to its commercial activities.

The main tax risks for the UK Group are idenitifed as:

            2.2.1     Tax compliance and reporting risks. These risks are associated with the failure to comply with the tax regulations of the appropriate authorities within each market the UK Group operates. The risk is reduced by using external professional advisers to prepare, advise and review tax computations and submissions, together with an in-house team of qualified accountants and experienced tax experts.

            2.2.2     Transactional risks. As the UK Group operates across several markets with associated complex tax issues, advice is always taken from professional advisers when new  distribution channels are established, or current transactions amended, in order to ensure adherence to the correct rates and treatment of tax.

            2.2.3     Reputational risks. The UK Group ensures they are open and transparent with every governing entity in every market, although it will be primarily with the HMRC in the UK. The UK Group has a conservative approach to tax planning and aims to have open communucations with all tax authorities.

2.3       Documented Policies and Procedures.

The UK Group will comply with documented policies and procedures in relation to tax risk management and will conduct risk assessments before entering any new initiatives. Where appropriate, this will include obtaining external professional opinions to verify and support the UK Group tax management team’s conclusions.

2.4       Tax Planning

The UK Group strives to maintain a low risk rating with HMRC.

Whilst seeking to be efficient in the tax affairs and reduce the tax liability through taking of reliefs and incentives where applicable, the UK Group ensures that any tax planning is based on sound commercial principles but will show respect at all times for the intention and spirit of the law, as well as the letter of the law.

2.5       Relationship with HMRC and other tax authorities

The UK Group seeks to build and sustain honest, transparent relationships with HMRC and other tax authorities that are constructive and based on mutual respect, avoiding unnecessary delays and disputes wherever possible.

 

SECTION 3: GOVERNANCE

3.1       Internal ownership and structure

The Mölnlycke Group Tax Director implements the world-wide group tax strategy, which includes the UK Group tax strategy. Within the UK group, the Mölnlycke Group Tax Director is assisted by the UK Finance Director and the UK Finance Manager. The Tax Strategy is approved by the Board of Directors.

 

3.2       External Consultants

For matters where the Group Tax Director and UK Finance team consider they have insufficient skill or experience, external expert consultants who have suitable knowledge of the Mölnlycke Group, the industry and tax law are engaged to provide advice and guidance.

 

 

 

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