This document sets out the principles governing UK taxation matters of Verizon UK Limited and all other UK affiliates (collectively known as "Verizon UK") of Verizon Communications Inc. ("Verizon"), the U.S. parent company of the global Verizon group of companies (the "Group"). This document is published in accordance with Schedule 19 Finance Act 2016 and covers all Verizon operations carried out by Verizon UK in the UK and the taxes relevant to those operations. As part of the Group, Verizon UK's business operations are predicated on Verizon's Credo which consists of four core values: Integrity, Respect, Performance Excellence and Accountability. The Verizon Credo is the cornerstone of how every Group entity (including Verizon UK) conducts business and is embedded in the Group's global principles towards taxation. In particular, the core values of Integrity and Accountability support our core tax principles that it is important for every Group entity to pay the correct amount of tax in the jurisdictions in which it operates and to fully comply with the applicable tax laws, rules, regulations and disclosure requirements of such jurisdictions. In applying the Verizon Credo to our tax affairs, the Group considers, assesses and monitors whether it is acting in a manner that our customers, shareholders and the wider public would expect. This mind-set with respect to our tax affairs and our approach to managing tax risk not only applies to each existing Group entity, but also to any entity, business or operation that may acquired by the Group.
The Group's approach to tax risk management and governance
The Group tax principles, and compliance with them, are subject to the oversight of and are periodically reviewed by the Audit Committee of the Group's Board of Directors as well as the Group Chief Financial Officer and General Counsel. Day to day responsibility for adherence to the Group's global tax principles resides in the Group Senior Vice President & Deputy General Counsel Corporate Taxes (" SVP Tax "); who, in turn, has delegated the responsibility of managing UK tax matters to the Head of Tax of Verizon UK. The Head of Tax of Verizon UK is supported by the UK Tax Function which is staffed with appropriately qualified tax professionals who have the relevant credentials, skills and experience to perform and carry out their roles and responsibilities in accordance with the Group's tax principles. In addition, there is continued oversight and support from the SVP Tax and the Group tax function in the U.S. on relevant UK tax matters. Furthermore, third party tax advisors are routinely engaged by the Group and Verizon UK to provide subject matter expertise and assistance and to keep them apprised of tax law changes that impact their tax compliance and reporting responsibilities.
Formal tax governance policies and controls
Formal tax governance policies and controls exist across the Group, and Verizon UK operates within these policies and controls. The policies and controls governing the management of our tax affairs are fully aligned with the Group's wider commercial, reputational and business practices and are consistent with our commitment to corporate responsibility as guided by the Verizon Credo. These policies and controls are subject to periodic review by the SVP Tax, our external auditors and the Group Internal Audit function.
Acceptable level of risk
The Group and Verizon UK have a low tolerance for risk in relation to tax matters and we therefore take a conservative approach to managing our tax affairs. We comply with all applicable tax laws, rules, regulations and disclosure requirements and we pay the correct amount of tax based on the tax laws, rules and regulations in the jurisdictions in which we operate. As such, we only undertake tax planning that is aligned with a strong commercial and economic purpose that is intended to create long-term, sustainable value to our shareholders. Whenever possible, we also endeavour to embed tax processes and controls within the Group's business operations to further mitigate tax risk.
Transparency and disclosure
The Group and Verizon UK are committed to ensuring that stakeholders are able to understand the important elements of our tax position and that the information we provide is complete and accurate. We seek to have constructive working relationships with tax authorities based on mutual respect, trust and transparency. We proactively engage with tax authorities to ensure that we are interpreting their tax laws and other relevant guidance in a manner that is compliant with the tax laws whilst ensuring that the wider reputation of the Group is not compromised. This is demonstrated by the relationship that Verizon UK has with Her Majesty's Revenue and Customs ("HMRC") discussed immediately below.
Relationship with HMRC
The UK Tax Function represents Verizon UK in all dealings with HMRC. We seek to maintain a professional, open and constructive relationship with HMRC consistent with the Group tax principles outlined above.
Verizon UK has been in a tax compliance program with HMRC for a dozen years. This formal compliance program covers all UK direct and indirect taxes and we meet periodically throughout the tax year with HMRC to review our tax positions and any significant business transactions. Verizon UK is a responsible taxpayer and maintaining a transparent and good working relationship with HMRC is important to us. We seek to maintain this constructive relationship with HMRC by:
- acting professionally at all times;
- making full disclosures in all of our UK tax filings;
- responding to any HMRC audits and enquiries on a timely basis;
- using meetings with HMRC to assist progression and transparency of issues;
- providing real-time updates on transactions and other business matters likely to be of interest to HMRC; and
- working collaboratively to resolve any areas of differences in interpretation and application of the UK tax laws.
In circumstances where an area of tax law is complex and may have a material impact on our financial position, we will seek to have real time discussions with HMRC in order to gain certainty over the treatment for UK tax purposes and to reduce the potential for any future dispute.