HL’s approach to tax
This page sets out Hargreaves Lansdown’s approach to tax, in compliance with the duty under Finance Act 2016 Schedule 19 paragraph 16(2) to prepare and publish a group tax strategy on behalf of the Hargreaves Lansdown plc group (“HL”) for its financial year ending 30 June 2023.
HL’s risk management and governance arrangements in relation to UK taxation
HL’s tax function is part of the Finance team led by the Chief Financial Officer, who is also the Senior Accounting Officer (“SAO”) for the UK’s SAO regime. Tax is managed according to the following principles:
- People - establishing effective teams of people who have the right mix of skills and experience (internal and external)
- Leadership - ensuring tax is aligned with corporate objectives and has an appropriate profile in the organisation
- Controls/ risk management - integrating risk-management processes and controls around tax function deliverables
- Process - optimising processes to improve efficiency and accuracy
- Data management - ensuring that both quality data is available and proper data management is put in place
- Technology - investing in effective systems to enable streamlining and automation of tax processes
- Communication - increased and effective communication to manage relationships with internal and external stakeholders
Tax is monitored regularly as part of the Audit Committee’s rolling agenda to ensure oversight of the Group’s tax strategy.
HL’s attitude towards tax planning
The Group does not undertake ‘aggressive’ tax planning. A view is taken on all planning opportunities dependent on a number of factors, including the:
- Benefit to the company
- Level of risk
- Likely effect on the ‘brand’ of HL in the marketplace
Tax planning is only undertaken where there is a clear business reason. The Group has an obligation to act in the interest of all stakeholders, including shareholders, clients, employees, and tax authorities, and will maximise any legitimate tax planning opportunities to the extent to which the legislation intends. In practice however, our low tax risk appetite and tolerances mean that it is very rare that tax planning occurs and hence HL’s effective tax rate closely matches the prevailing tax rate. We seek external advice if we consider the relevant tax legislation to be unclear or subject to interpretation.
The level of tax risk HL will accept
As a client-focused organisation whose success is reliant on trust and reputation, we have a low appetite for tax risk or planning. Our clients expect us to pay tax at standard rates, as many of them do, and hence we manage our tax affairs to provide sustainable and compliant outcomes. This risk appetite is reviewed regularly as part of the Audit Committee’s oversight of the Group’s tax strategy. Within this, we will at all times look to consider the tax consequences of business decisions in advance to maintain this position and ensure we are operating within our risks and tolerances. We take a similarly low risk approach to our client related tax obligations such as Automatic Exchange of Information (AEOI) and withholding taxes. Furthermore, we have in place reasonable prevention procedures to prevent the facilitation of tax evasion, in line with our duty.
How HL works with tax authorities
The Group has an open, honest and positive working relationship with tax authorities. We are committed to prompt disclosure and transparency in all tax matters. We recognise that there will occasionally be areas of differing legal interpretations with the tax authorities and where this occurs engagement will be proactive to bring matters to as rapid a conclusion as possible.
In 2017 the Group began operating in Poland by launching its Warsaw technology centre, HL Tech. We chose Warsaw for its vibrant business culture, flourishing technology sector, excellent communications infrastructure and its large numbers of English-speaking IT professionals. HL Tech currently employs 60 developers to complement HL’s existing Bristol IT development team.