Burberry’s Tax Strategy
As a global luxury retailer, wholesaler and manufacturer, operating in over 400 retail locations worldwide, we take our corporate, social and environmental responsibilities very seriously.
Our tax strategy enables the Group to fulfil those responsibilities in respect of all business taxes.
The tax strategy applies to Burberry Group plc and its worldwide 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 these requirements, our tax strategy covers the following areas:
- Governance, risk management and compliance
- Tax planning
- Dealings with Tax Authorities
- Tax risk management
Approach to governance, risk management and compliance
Our Chief Operating and Financial Officer is responsible for the Group Tax strategy, the effectiveness of corporate tax processes and transparency of disclosures. The Group Tax strategy is implemented by the global tax and trade compliance teams with the assistance of the finance leadership team. Compliance with the Group Tax strategy is reviewed on an ongoing basis as part of the regular financial planning cycle. The Group’s tax status is reported regularly to the Audit Committee. The audit Committee is responsible for reviewing the Group Tax strategy at least once a year and significant tax matters as they arise.
Audit Committee meetings are attended by Group officers and employees including the Chief Operating and Financial Officer; Chief Executive Officer; Senior Vice President, Group Finance; Senior Vice President, Internal Audit and Risk; the Vice President, Group Financial Controller; Chief People Officer; Company Secretary and the General Counsel, who chairs the Ethics Committee and oversees all corporate responsibility matters.
Burberry is subject to tax in many countries. The Group employs an in-house team of tax and trade compliance professionals who also partner with the business and finance teams to manage the Group’s tax risks in a controlled and proactive manner. All staff have the necessary training to manage our tax position appropriately.
We have established and maintain appropriate tax accounting 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 third-party service providers, whose performance is monitored and assessed against key delivery targets.
Approach to tax planning
The Group is committed to acting with integrity and transparency on all tax matters and complying fully with the letter and the spirit of the relevant tax law, having regard also to international standards and recommendations around tax practice and tax reporting.
The Group will only engage in responsible tax planning aligned with our commercial and genuine economic activities. We do not use tax structures or undertake artificial transactions the sole purpose of which is to create a contrived tax result. For example, we exclude transactions with parties based in tax haven jurisdictions when the transactions are not in the ordinary course of Group trading business or which could be perceived as artificially transferring value to low tax jurisdictions.
Approach towards dealings with HMRC and other Tax Authorities
Burberry seeks to engage in open and constructive dialogue with HMRC in the UK and with tax authorities in all the 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 them promptly. In the UK, the SVP Group Finance and the global tax and trade compliance teams 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, either on our own account or through relevant trade and industry organisations.
Tax risk management
The Group’s processes, policies and governance are designed to identify and mitigate material tax risks. The complex and ever-changing international tax environment, international political developments and consequent changes in the way we do business mean that there is always an element of tax risk and uncertainty inherent in the Group’s operations. To this end, we have formalised our tax risk identification, measurement, reporting and monitoring processes to manage these risks and ensure appropriate mitigation steps are taken. Significant tax risks and progress on mitigating actions are reported regularly to the Audit Committee.
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 transfer pricing and the treatment of intragroup, cross border transactions. Our Transfer Pricing policy has been developed in line with OECD arm’s length principles and domestic laws. Our approach provides an appropriate return to each entity in the Group, commensurate with the economic activity and business risk assumed by that entity. While we operate a consistent global model for transfer pricing of goods and services, governments may adopt different and sometimes contradictory positions in relation to the same transaction or arrangement. We would aim to seek assurance and resolution of any disputed transaction or arrangement through appropriate domestic or international dispute resolution procedures. Where appropriate we would seek assurance in advance 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 FY21, the total taxes borne and collected by the group amounted to £334.7m. In the UK, where the group is headquartered and has significant operations, Burberry paid business taxes of £58.1m and collected a further £14.2m 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||133.9|
|Corporate taxes paid||58.0|
|Employer NIC/social security payments paid||50.2|
|Customs duties / excise taxes paid||63.8|
|Property taxes suffered||24.7|
|Other taxes suffered||4.1|
|Total taxes collected||14.2|
|Corporate taxes paid||19.7|
|Employer NIC/social security payments paid||21.3|
|Customs duties / excise taxes paid||2.6|
|Property taxes suffered||14.4|