UK Tax Strategy for the year ended December 31, 2021
WEX Inc. is a US multinational corporation with operations in the UK. In accordance with Part 2 of Schedule 19 Finance Act 2016, the following UK tax strategy applies to all parts of the WEX group that falls within the legislation; a list of which can be found in the appendix at the end of this strategy. For the purposes of this strategy any reference made to ‘WEX’, ‘the group’, ‘the subgroup’, ‘the company/ies’ or ‘the partnership’ solely relates to the parts of the WEX group that are listed in the appendix.
The WEX entities identified in the appendix, are responsible for fulfilling their obligations related to all UK taxes.
Without reference to specific UK tax obligations, there are a number of tax risks that could have one or more of the following outcomes without appropriate management:
- Not timely and accurately filing of UK tax returns;
- Not settling its tax liabilities accurately and/or on time; and
- Not complying with other obligations relating to tax that are not described above.
The consequences for not fulfilling its tax obligations can include financial penalties for the relevant companies, but also other sanctions as prescribed under legislation.
The core objective of WEX’s UK tax strategy is to comply with all applicable tax legislation and obligations, including the timely delivery of any tax documents and timely settlement of tax liabilities. Additionally, WEX will maintain an open, transparent, and honest relationship with HMRC.
Each WEX UK company must also consider the priorities of its stakeholders, which are set out for the directors of each WEX UK company in the Companies Act 2006, specifically s.172:
“… a director must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.”
To this end, the directors of each WEX UK company will take all of their legal obligations into account, alongside the company’s tax responsibilities. WEX acknowledges that the success of its UK companies, while primarily viewed in commercial and financial terms, also refers to other concerns and responsibilities, including taxation. The directors and employees of each WEX UK entity are therefore expected to make due consideration to all applicable legal and regulatory obligations, but also consider the business’ reputation, and corporate and social responsibilities.
The purpose of this document is to set out how we approach tax risk management, our attitude to tax planning, the level of tax risk that we are prepared to accept and how we work with HMRC, the UK tax authority.
The Company’s Code of Conduct and Business Ethics guides each WEX entity in its management of tax risk and planning, and its relationship with HMRC.
Tax Governance and Tax Risk Management
The Board of Directors for each WEX company is responsible for corporate governance, including how each company manages tax risks as part of a wider framework.
WEX is also within the Senior Accounting Officer (SAO) regime; the SAO is aligned with the requirements of the regime and takes reasonable steps to maintain appropriate tax accounting arrangements within the business.
The VP International Finance responsible for each WEX UK entity is responsible to design and implement all processes required to identify tax obligations and to comply with the requirements of the relevant legislation or other statutory instrument. As part of an ongoing review of approach to tax management, the WEX UK companies will consider whether any changes may be required, such as new systems, refinement to processes and staffing. The WEX UK companies will seek external, professional advice on preferred structures and processes to improve tax governance and risk management. The VP International Finance highlights significant tax risks to each Board and recommends actions to mitigate such risks accordingly.
The VP International Finance monitors all areas of potential tax risk with the senior members of the relevant Finance team. Specific tax compliance tasks are delegated to certain members of the Finance team, depending on the level of experience required. WEX maintains a close relationship with external tax advisors and will actively seek external tax advice where there is a significant uncertainty or complexity.
Tax evasion and the facilitation of tax evasion will not be tolerated.
WEX attitude to tax planning
WEX defines tax planning as any form of planning, discussion, or similar consideration where the implications of the proposed activities are assessed from a tax perspective. It is therefore broad in scope, but each Board seeks to provide a framework for management to distinguish between types of tax planning that each Board considers acceptable or not. The principle that guides this distinction is whether the outcome of the planning is aligned with the commercial and economic substance of each UK company, and WEX will look to avoid structuring its tax affairs in a manner that is not consistent with this principle.
As part of any commercial planning decisions, we will make use of legitimate tax reliefs, allowances, and credits where it is the opinion of each Board that the interpretation of relevant legislation is in line with both the letter of the law and the intentions of Parliament; e.g., tax credits for activities considered to be research and development.
To this end, each Board has identified certain subject matters where there may be a greater risk of uncertainty in applying the principles above, notably:
- changes in corporate or business structure (i.e. reorganisations);
- intercompany transactions (particularly cross-border); and
- business acquisitions or disposals.
Tax planning will be led by the VP International Finance in conjunction with the respective Finance teams and with primary oversight by the WEX Inc. VP Tax. The VP International Finance will report significant matters with their tax implications to each Board. As part of the consideration for such processes, the WEX UK companies will seek external advice from tax professionals, and always in cases where there is insufficient knowledge on the subject matter and/or uncertainty on the application of certain tax law. Where there remains significant uncertainty, WEX may approach tax authorities to seek clarity and will consider specific procedures for clearance in advance of transactions, where possible.
Level of risk the UK companies are prepared to accept for UK taxation
As stated in the core objective, the overarching priority in this tax strategy is that the WEX UK companies will seek to comply with all applicable tax legislation and similar statutory instruments. All tax planning must take place with adherence to the principles set out above.
If a situation arises where, although the proposed outcome is considered to be aligned with the commercial and economic substance of the WEX UK companies, but there is uncertainty regarding tax compliance, then the situation should be resolved by seeking external, professional tax advice.
As stated above, if uncertainty remains thereafter, an approach to the tax authority should be explored.
If uncertainty still persists despite the steps above, then management must consider all relevant factors, noting that the preference of the Board is to adopt a low-risk approach to tax compliance and to avoid tax authority disputes. This may require management to seek Board approval in certain cases and to also consider a range of factors, such as the stated intention of HM Government in enacting the legislation and not just a literal interpretation of the statutory instrument (if not considered already).
Approach towards dealings with HMRC
Each WEX UK company seeks to develop co-operative relationships with tax authorities as it wishes to fulfil its core tax objective of complying with all applicable tax legislation and relevant instruments. Each Sub-Group believes that a pro-active approach to its tax affairs will help to minimise the risk of inaccuracies in its tax filings and errors in settling tax liabilities on a timely basis. As part of this, the WEX UK companies will endeavour to inform tax authorities on discovery of any errors or omissions in relation to tax obligations as soon after they are identified, and the circumstances of their occurrence have been understood.
The purpose of this approach is to facilitate a relationship that is both open and honest resolution. Where appropriate, we communicate and engage with HMRC on matters of uncertainty and aim to provide timely responses to any queries from HMRC.
Each WEX UK Entity or UK Sub-Group regards the publication of this document as complying with their respective duties under Schedule 19 of the Finance Act 2016 to publish its tax strategy.
This UK tax strategy was approved by the Boards of the WEX UK Companies.
|UK Entity or Sub-Group
||Relevant Paragraph of Schedule 19 Finance Act 2016
|Wright Express International Holdings Ltd
|eNett International (UK) Limited
|Wright Express Holdings 4 LP
||Par. 12 & 25