Group Tax Strategy
Rotork is a market-leading global provider of mission-critical flow control and instrumentation solutions for oil and gas, water and wastewater, power, chemical process and industrial applications. A global business with over 3,300 employees, we serve customers in more than 170 countries through our network of 63 offices, 16 manufacturing facilities and our relationships with local agents.
Our tax strategy supports the strategic commercial objectives of the group worldwide and applies equally to UK and non-UK taxes.
Our overall tax strategy is for full disclosure and cooperation with all tax authorities and, where possible, to mitigate the burden of tax within the local legislation.
We pay a significant amount of tax in those jurisdictions in which we have a taxable presence, including corporate income tax, social employment taxes, withholding taxes and customs duties. In addition, we also collect on behalf of tax authorities sales taxes charged to our customers, and employment taxes and similar withheld from our employees’ salaries. We abide by the law in all those territories in which we operate.
Tax risk management and governance
We operate in a number of tax jurisdictions as well as the UK, and so we are exposed to different tax risks around the world. Such tax risks include those associated with ensuring our tax accounting arrangements are sufficient to ensure timely and accurate filing of tax returns and related tax payments, as well as those attached to specific transactions or the underlying tax risks attached to our day-to-day business arrangements.
The Rotork group is headed by Rotork plc, and the Board of Rotork plc is ultimately responsible for this Tax Strategy and will review it on an annual basis. The Board receives regular updates from the Group Finance Director, who is also the UK Senior Accounting Officer. The Group Finance Director in turn is supported by the Group Finance Function, which includes the Group Tax Department.
The Rotork Group Tax Department is staffed by personnel with appropriate professional qualifications and sufficient expertise to fulfil, with the assistance of professional advisors, the responsibilities that are required for that function. Individual Financial Controllers in our companies throughout the world rely on the Group Tax Department and external local tax advisors to keep them up-to-date on taxation matters.
There is a formal tax governance framework which governs the day-to-day implementation of the Strategy. This includes a Groupwide Tax Policy and a specific tax section in the Rotork Group Accounting Policies and Procedures manual. Together these policies are circulated to all relevant personnel and detail the level of authorisation required for matters that could create significant tax risks.
We are committed to ensuring that our businesses worldwide meet the compliance obligations of the UK corporate criminal offence of failing to prevent the facilitation of tax evasion.
Attitude to tax planning
We are committed to paying the right and fair amount of tax in each territory in which we operate. When our companies transact with each other, it is on a commercial arm’s length basis at a value which reflects the functions and risks associated with each entity’s role in the transaction. We do not enter into transactions of a purely tax-driven nature with no underlying commercial rationale, or which are contrived or artificial.
We do make use of available tax allowances, deductions, concessions etc. as a legitimate and efficient part of the way we pursue our commercial operations. As an engineering company with a strong track record in innovation, we make full use of tax incentives introduced by governments around the world, including the UK, concerning research and development expenditure and the utilisation of patent box regimes.
Acceptable levels of tax risk
We operate in many tax jurisdictions worldwide. Because tax laws in these jurisdictions are complex and may be subject to varying degrees of valid interpretation, we may seek to resolve any ambiguity by using appropriate professional advice and by entering into early dialogue with local taxation authorities, including HMRC in the UK.
We set our risk appetite at a principal level such that we do not pursue aggressive tax planning schemes and consider the tax impact in making business decisions. When considering the tax risk implicit in transactions we do take into account factors such as reputation, financial and operational risks, and any impact it may have on our relationship with local tax authorities.
Relationship with tax authorities
We have a policy of full disclosure and cooperation with all tax authorities, including HMRC in the UK.
To this end, we are committed to creating an open and transparent working relationship with tax authorities in the jurisdictions in which we operate. We aim to achieve this by engaging tax authorities in an open and courteous manner and responding to enquiries in a timely fashion.
Rotork plc considers that the publication of this document fulfils its duty to comply with Paragraph 16(2), Schedule 19, Finance Act 2016 (“Qualifying UK groups: duty to publish a group strategy”) for the year ended 31 December 2023.
This document was approved by the Board of Rotork plc on 5 October 2023, and published on 16 November 2023.