LG Electronics U.K. Ltd. Tax Strategy
LG Electronics U.K. Ltd. (LGE UK) was incorporated in the United Kingdom in 1987 and is engaged in the distribution of electronic products and electrical appliances. LGE UK’s business consists of home entertainment, mobile communications, home appliances, air solution and vehicle components. In accordance with Schedule 19 of the Finance Act 2016, LG Electronics Inc. (LGE UK’s ultimate parent company, incorporated in the Republic of Korea) (LG INC) sets out below the tax strategy for LGE UK. LGE INC is a global leader and technology innovator in consumer electronics, mobile communications and home appliances.
This strategy applies from the date of publication until it is superseded. This document sets out the strategic tax objectives for LGE UK. The tax strategy is in line with the LG group’s strategic and commercial objectives, and all tax obligations are complied with, in the countries that group companies operate.
This strategy applies to the following types of tax reportable and payable to the relevant tax authorities:-
- Corporation tax
- Indirect taxes
- Employment taxes
- Customs and Excise Duties
- Stamp Duty Land Tax
- Any other tax liabilities in respect of which LGE UK has legal responsibilities.
Tax Risk Management-General
LGE UK has a professional attitude towards tax transparency and tax risk is managed in a manner consistent with the management of all other risks within the organisation.
A robust risk management framework is adopted throughout our business as well as the management of company tax affairs.
LGE UK sees that it is crucially important that under all relevant laws and regulations the correct amount of tax is paid on a timely basis. We have an effective tax control framework to identify any tax risks and to manage those risks through this framework.
Tax Risk Management-Interactions with the Business
The tax department plays an important role in LGE UK as it supports the whole organisation to achieve its commercial objectives and corporate tax compliance.
The tax department provides appropriate input in business proposals to ensure that tax implications are indentified and brought to the senior management before the final decision is made. The tax department also ensures that accurate tax returns are filed by their deadline and the tax accounts reflect the correct values.
LGE UK’s day-to-day tax management is delegated to the tax department that reports to the CFO. The tax department consists of appropriately qualified individuals.
The tax department on a regular basis monitor LGE UK’s systems to ensure appropriate financial reporting and that there are appropriate internal processes, procedures and controls relating to taxation within the business.
The ultimate responsibility for identifying tax risks lies with the Board where they are addressed and any necessary procedures are put in place to avoid reoccurrence of the said risks.
LGE UK’s tax strategy is approved by the Board.
Managing tax risk
- LGE UK aims to reduce its tax risk by having robust processes and procedures in place and it takes reasonable care to ensure these are complied with by everyone in the organisation
- Processes and procedures are reviewed on a regular basis and where required, they are updated with the latest legislative changes.
- Training is carried out for internal staff to raise awareness of the tax process management
- Each risk is assessed on a case by case basis and external expert opinion is sought wherever necessary.
Our Approach to Tax Planning
LGE UK is committed to full compliance in all statutory obligations; this involves management of tax risks to ensure compliance with legal requirements in a manner which ensures the payment of the right amount of tax.
LGE UK takes advantage of available tax reliefs and exemptions and tax incentives that are in line with tax legislation, of a type that the tax authorities would expect.
LGE UK does not use tax avoidance schemes or aggressive tax planning.
The level of risk which LGE UK accepts in relation to UK taxation would be either extremely low or none. LGE UK complies with all regulatory and other obligations and acts in a way which upholds its reputation as a responsible corporate entity.
Relationship with the Tax Authorities
Our objective is to build a stable, transparent and professional working relationship with HMRC and other tax authorities
In December 2014, being part of periodical risk review, HMRC confirmed that LGE UK will continue to benefit from a low risk status. In August 2017, HMRC notified that LGE UK’s low risk status shall be continued for another period of three years until the next review is carried out.
This also confirms that LGE UK is transparent and open in dealings with HMRC in real time.
This is achieved by ensuring that the following are in place and/or under regular review at all times:-
- Filing all tax returns and paying the tax due to the relevant tax authorities on time
- Putting in place a return review system to eliminate any errors
- Having robust tax compliance procedures to support the tax returns and payments thereon
- Having a well established working relationship with HMRC
- Having regular communication including training to relevant people
- Obtaining advices from external tax experts in case of complex matters
LGE UK tax department adheres to the guidelines set by the authorities and act with integrity and communicates openly.
LGE UK believes having a tax effective control framework is key to an organisation and continuously review its systems and processes to support its tax strategy.