This publication sets out the tax strategy of Post Office Limited and its UK subsidiary undertakings (referred to hereafter as the “Group” or “Post Office”) for the financial year 2021/22, and in making this strategy available the UK Group is fulfilling its responsibilities under the Finance Act 2016, Chapter 24, Schedule 19, Part 2, Paragraphs 16 & 17.
This tax strategy applies to UK taxes applicable to the Post Office and its affiliated entities both in the UK and overseas. The document is ultimately owned by the Board of Directors of Post Office Limited (“the Board”).
The tax strategy is reviewed annually, updated as appropriate and approved by the Board each January to cover the next financial year. The Board, along with assistance from the Group Finance teams, take ultimate responsibility for setting, monitoring and amending the strategy as required.
In summary, the Post Office is committed to:
- following all applicable laws and regulations relating to its tax activities;
- continuing to have an open and honest relationship with HM Revenue & Customs driven by collaboration and integrity; and
- applying diligence and care in our management of taxes, and ensuring that our tax governance is appropriate.
How the Post Office manages its tax risks
The Group’s approach to UK tax risk management and governance is based on the principles of reasonable care and materiality. The Post Office applies good tax governance principles, including carrying out frequent risk metric assessments and the reviewing the applications of internal control procedures, in order to reduce tax risks to materially acceptable levels.
As part of this governance, the Post Office has identified tax risks, which are maintained internally on risk registers, with their materiality being assessed based on a corporate risk matrix. The matrix then records the potential impact, subject to two contributory factors, the exposure if the tax risk crystallises and the relative likelihood of the risk crystallising.
Monthly process reviews are carried out, based on the risk areas, and confirmation reports and evidence are logged in the external auditor’s software. A quarterly tax report is then presented highlighting any significant / material issues to the Chief Financial Officer for his consideration, with further discussion at Board level and with HM Revenue & Customs should the issue merit engagement of the tax authorities. Where decisions are deemed to be complex or have an element of uncertainty assistance from third parties may be sought to aid the Post Office’s decision-making process.
Given that the Post Office is owned by the British Government's Department for Business, Energy & Industrial Strategy, it understands the importance of its transparent business operations.
The Post Office will not engage in artificial transactions the sole purpose of which is to reduce UK tax. As well as the above the Post Office will not engage in tax efficiencies if the underlying commercial objectives do not support the Group’s position, or if the arrangements impact upon the Post Office’s reputation, brand, corporate and social responsibilities, or future working relationships with HM Revenue & Customs.
Approach towards dealings with HMRC
The Post Office has always been and remains committed to maintaining integrity and transparency when dealing with HMRC. The Post Office underlines these principles by agreeing to:
- Accurately disclose all information required in correspondence and returns, and efficiently respond to communications as and when required. Where additional work is required, such as in the event of a disagreement, we will look to resolve this in the most professional and efficient way possible.
- Be open and transparent about decision-making, governance and tax planning, firstly by ensuring that it is liaising directly with our dedicated HMRC team and secondly by publishing our tax strategy easily accessible within the public domain.
- Ensure all interactions with HMRC are conducted in an open, collaborative and professional manner.
Chief Financial Officer and Senior Accounting Officer
(Updated January 2021)