Harsco Metals & Minerals

UK Tax Strategy for the year ended 31 December 2017

This document is produced in accordance with the requirement set out in Part 2 of Schedule 19 Finance Act 2016 for Harsco to publish the Group’s tax strategy.

Guiding tax principles

Harsco is a responsible taxpayer. Of primary importance is that the Group pay at the right time the correct amount of tax due under all relevant laws and regulations, including the Organisation for Economic Co-operation and Developments’ (“OECD”) internationally applicable arm’s length principle in relation to transfer pricing matters.

The Group’s tax strategy follows its commercial strategy including Harsco’s ethics which are an essential part of its core values and approach to doing business. Harsco has a long established Code of Conduct, https://www.harsco.com/about-us/corporate-governance.aspx, and the management of tax within the Group must fit within this framework. This includes the approach taken to the Group’s relationship with HM Revenue and Customs (“HMRC”) which involves being open, honest, professional and collaborative at all times.

Approach of the Group to risk management and governance arrangements

Harsco’s Board of Directors are responsible for determining the Group's approach to tax, working in conjunction with Harsco’s Chief Financial Officer and Vice President of Tax and Treasury, with further review and ultimate approval by Harsco’s Audit Committee.

The board and senior management stakeholders have established an internal control tax framework which operates effectively to ensure Harsco identify and manage tax risk. The key elements of this framework are:

  • Reporting lines with appropriate delegated authorities and responsibilities to provide for clear accountability and information flows.
  • Competent and qualified internal tax and finance resource with relevant skills and expertise to carry out assigned responsibilities.
  • Internal resource supplemented to the extent necessary by external advisers to ensure our tax compliance obligations are met.
  • Periodic upward reports by the Vice President of Tax and Treasury on taxation matters to senior management, the Audit Committee and the Board of Directors as appropriate. These periodic reports explain the Group’s tax liabilities for the year, including any newly arising tax risks such as changes in tax legislation or policy where they may have an impact on the Group.
  • Monthly meetings involving the European Tax and Treasury Director with key UK finance, tax, legal, business and technical managers to discuss business operations, transactions and issues to ensure tax and commercial objectives are aligned and tax risks are identified, properly assessed and monitored on a real time basis.
  • End to end tax processes and controls which ensure that the necessary information to support accurate tax filings are readily available and effectively communicated both internally and externally. These processes include tax input from internal staff and external advisers who review the work undertaken by internal staff where additional expertise is required.

The above approach enables Harsco to identify any tax risk arising from the commercial transaction activity it undertakes, both day to day and ‘one-off’. Having identified transactions which have a specific tax treatment under the UK’s tax rules, Harsco ensures the correct treatment is applied by appropriately qualified tax staff conducting the necessary analysis (with further input from external advisers where necessary).

Ongoing checks are made on financial processes and procedures to ensure staff responsible for processing transactions perform their functions correctly and diligently. Tax accounting and financial processes and procedures fall within the Corporate Internal Control Framework and consequently checks and key-controls are in place to ensure that proper compliance, accounting and appropriate reporting of financial transactions and processes occur.

Attitude of the Group towards tax planning (so as affecting UK taxation)

The commercial needs of Harsco are paramount. All transactions are therefore required to have a sound commercial or business purpose. The Group’s approach to tax planning is to support and align with the business in making use of tax reliefs which apply, and are intended to apply, to the commercial transactions it undertakes.

The level of risk in relation to UK taxation that the Group is prepared to accept

In line with Harsco’s guiding principles the primary objective is to apply the law correctly to all transactions and in so doing aim to minimise the tax risk. Harsco recognises that tax legislation can be complex and subject to interpretation, consequently appropriate independent advice is taken if needed to reduce any potential uncertainty as far as possible. Should significant tax uncertainty arise as to how a particular tax matter is to be interpreted, the Group will only adopt a tax filing position in its returns if the advice it receives strongly supports its position as being the correct interpretation in law. In such circumstances, full disclosure is made to the tax authorities of the facts and technical treatment adopted in advance of filing any returns.

The Group’s approach towards its dealings with HMRC

The Group adopts an open, honest and cooperative working relationship with HMRC. In so doing the Group seeks to develop and foster good working relationships with HMRC. As part of this approach the Group maintains a pro-active dialogue to make HMRC aware of any developments within the business that could have a tax impact. By adopting this pro-active approach the Group seeks to prevent disputes arising. Should the Group form a different view to HMRC over the tax treatment of a particular transaction, the Group’s policy is to work collaboratively with HMRC and seek to resolve the matter by agreement where possible.

Publication Date: 7 December 2017