Burberry’s Tax Strategy
Burberry is a global British luxury brand with heritage in design, innovation and craftsmanship. The Burberry team consists of over 10,000 employees worldwide. Our Company designs, develops, makes and sells products under the Burberry brand. Product design and development are centred in Burberry’s London headquarters with finished products manufactured at both company owned facilities in the UK and through an external supplier network predominantly located in Europe.
As a global luxury retailer and manufacturer operating in over 400 retail locations worldwide, we take our corporate, social and environmental responsibilities very seriously. The tax strategy set out below is intended to enable the Group to fulfil those responsibilities in respect of tax. Our tax strategy applies to Burberry Group plc and its subsidiaries. We regard publication of this document in the current financial year as complying with the requirements of paragraph 16(2) of Schedule 19 of the Finance Act 2016.
To meet the new requirements, our tax strategy covers the following areas:
- Our approach to governance, risk management and compliance
- Our approach to tax planning
- Our approach towards dealings with Tax Authorities
- The level of tax risk we are prepared to accept.
Approach to governance, risk management and compliance
The Chief Operating and Financial Officer is responsible for the Group’s tax strategy, which is implemented with the assistance of the finance leadership team. Compliance with the tax strategy is reviewed on an ongoing basis as part of the regular financial planning and reporting cycle. The Group’s tax status is reported regularly to the Group Risk and Audit Committees.
The Audit Committee is responsible for monitoring all significant tax matters including the Group’s tax policy. Audit Committee meetings are attended by Group officers and employees including the Chief Operating and Financial Officer, the Senior Vice President Group Finance, Senior Vice President Risk Management and Internal Audit, the Group Controller, the Company Secretary, the General Counsel, and the Chief People and Corporate Affairs Officer, who oversees all corporate responsibility matters.
Burberry is subject to tax in many countries. The Group employs an in-house team of tax professionals who partner with the business and finance teams to manage the Group’s tax risks in a controlled and proactive manner.
We are committed to complying in a responsible manner with tax law and practice in all the territories in which we operate. We have established and maintain appropriate policies and compliance processes to ensure the integrity of our tax returns, and timely and accurate tax payments in all countries in which we operate. Corporate tax compliance is mainly outsourced to a third-party service provider, whose performance is monitored online against key delivery targets.
The complex international tax environment means that there is always an element of tax risk and uncertainty inherent with the Group’s operations. In common with many other multinational groups, our most significant source of uncertainty arises where two or more governments adopt different interpretations in relation to the transfer pricing of intragroup cross border transactions.
Approach to tax planning
The Group is committed to acting with integrity and transparency on all tax matters and complying fully with relevant tax law. The Group will only engage in responsible tax planning which aligns with our commercial and economic activity. We will not undertake artificial transactions whose sole purpose is to create a contrived result.
Tax is a cost of doing business in the same way as any other cost, and we look to take account of tax in reaching our business decisions.
Approach towards dealings with Tax Authorities
Burberry seeks to engage in open and constructive relationships with HMRC and the tax authorities in the other territories in which we operate.
We ensure that all tax filings are submitted on a timely basis. If we discover any inadvertent errors in tax returns or correspondence with tax authorities, we disclose and correct them promptly.
In the UK, the SVP Group Finance and the tax team have regular communication with our HMRC Customer Compliance Manager and specialist HMRC teams to promote a professional, collaborative working relationship.
We take an active role in contributing to the UK and international tax policy-making process, where relevant, including taking part in formal and informal consultations.
Level of tax risk we are prepared to accept
The Group’s processes, policies and governance are designed to identify and mitigate material tax risks in the countries in which we operate.
Tax laws and regulations can be subject to interpretation. Where appropriate, we seek assurance regarding the position taken, for example through advance pricing agreements.
Total Tax Contribution
The group makes a significant economic contribution to the countries where it operates through taxation, either borne by the group or collected on behalf of and paid to the relevant tax authorities. In FY17, the total taxes borne and collected by the group amounted to £426.2m. In the UK, where the group is headquartered and has significant operations, Burberry paid business taxes of £89.1m and collected a further £15.9m of taxes on behalf of the UK Exchequer. The composition of both global and UK total tax contributions are shown in the charts below:
|Total taxes collected||155.1|
|Corporate taxes paid||131.6|
|Employer NIC /social security payments paid||46.5|
|Customs duties / excise taxes paid||68.3|
|Property taxes suffered||17.4|
|Other taxes suffered||7.3|
|Total taxes collected||15.9|
|Corporate taxes paid||60.9|
|Employer NIC /social security payments paid||17.0|
|Customs duties / excise taxes paid||1.9|
|Property taxes suffered||9.1|
|Other taxes suffered||0.2|