GCP UK Tax Strategy for the Year Ended 31 December 2019

GCP Holdings (UK) Limited ( “GCP UK”), in compliance with, Paragraph 19(2) of Schedule 19 of the UK Finance Act of 2016, publishes the following tax strategy for itself and its UK subsidiaries for the year ended 31 December 2019. It is GCP’s strategic objective to (i) support its business operations by maintaining an appropriate tax rate, (ii) maintaining compliance with all tax law and regulatory requirements in the United Kingdom and all other jurisdictions within which the Company operates and (iii) facilitating ethical and transparent business practices.  

Risk Management & Governance

GCP’s internal organisation fosters its internal tax governance to provide transparency and enhance its ability to manage risks in its tax arrangements. Cross-functional coordination among all departments within the organisation is strongly encouraged to ensure proper vetting of all issues. External resources are utilised where necessary to resolve complex matters as well as obtain guidance with respect to changes in tax laws and regulations.

Tax impacts to corporate acquisitions and restructurings are reviewed by Senior Tax Management and approved by the Director of Tax to ensure the underlying accounting treatment is in compliance with UK legal and regulatory principles, and the tax impact is correctly classified. 

Quarterly, the UK Financial Controller coordinates with Senior Tax Management and the Director of Tax to review deferred balance sheet accounts to assess the ability to realise both domestic and foreign deferred tax assets (“DTA”). An increase or decrease to the valuation allowance, and the supporting calculations and assumptions, are determined and approved through the review.

Tax returns are reconciled to the tax provision and a true-up provision is performed by the UK Financial controller with support from the Corporate Tax Department. The Senior Tax Management reviews the reconciliation and material variances are investigated and explained. The Director of Tax completes a high-level review for completeness and accuracy before approval.

Cross-jurisdictional intergroup transactions are ensured to conform to arms-length principles through transfer pricing studies in compliance with OECD principles. Transfer pricing studies are performed as necessary to ensure contemporaneous documentation is available as required for each local jurisdiction undertaking commercial transactions with each of the GCP UK-based entities. Transfer pricing is reviewed to ensure that GCP UK’s practices adhere to GCP’s Corporate Transfer Pricing policy and OECD guidelines. Periodic reviews are conducted to test that operating margins and intercompany pricing meet the arm’s length standard.

Tax Planning

GCP strives to be a responsible business partner in its commercial activities as it relates to practicing its business operations pursuant to the tax laws and regulations as administered by HM Revenue & Customs (“HMRC”). Consistent to this strategy, GCP adheres to policy objectives of the laws and regulations in the UK while employing available tax reliefs and incentives, and do not engage in transactions that are in contravention to HMRC objectives.  Such compliance to UK legal and regulatory intent is also transparent in GCP’s tax planning and structuring of its commercial function within and outside of the UK. Members of GCP’s Corporate Tax are included throughout the process of initiating new commercial and planning opportunities to ensure conformance to the law and the proper resolution to any tax risks, and Board of Director approval is obtained where appropriate. Members of GCP’s Corporate Tax seek the advice of outside advisors and other external resources where necessary for guidance in complex transactions or to resolve tax matters within areas of legal ambiguity.

Level of Risk in relation to UK taxation the Group is prepared to accept

GCP Corporate policy is that the Company will adhere to all legal and regulatory tax guidelines of the HMRC. Pursuant to such policy, it is GCP’s objective to minimise the Company’s exposure to risk-oriented transactions when conducting its business practice. External tax advice is sought when necessary to address and mitigate uncertainty that could subject GCP to significant risk relating to UK taxation.

Approach towards its dealings with HMRC

GCP strives to maintain and develop a strong, proactive working relationship with the HMRC. The Company is committed to being transparent and proactive in all interactions with the HMRC, and to resolve issues and address uncertainties or complexities in accordance with the reasonable application of UK tax law and tax practice so as to minimise risk with respect to all tax matters.