IMI Annual Report & Accounts 2014 - page 102

100
IMI plc
SECTION 2 – RESULTS FOR THE YEAR
Continued
2.4
Taxation
IMI operates through subsidiary companies all around the world that pay many
different taxes such as corporate income taxes, VAT, payroll withholdings, social
security contributions, customs import and excise duties. This note aggregates
only those corporate income taxes that are or will be levied on the individual
profits of IMI plc and its subsidiary companies for periods leading up to and
including the accounting date. The profits of each company are subject to
certain tax adjustments as specified by applicable tax laws in each country to
arrive at the tax liability that is expected to result on their tax returns. Where
these tax adjustments cause future tax differences then deferred taxes may
also be recorded.
2.4.1
Governance and strategy
IMI seeks to effectively manage its taxation obligations worldwide in compliance
with all applicable tax laws and regulations. Therefore, the Group monitors
the tax contribution by the individual businesses to ensure it meets local tax
requirements, that available global tax incentives and allowances are recognised,
and any material tax risks are properly and promptly addressed, as well as
appropriately provided and disclosed in the Group’s accounts and tax returns.
IMI aims to build positive working relationships with tax authorities around the
world by fully co-operating in an open, constructive and timely manner. As tax
laws are often complex and sometimes ambiguous, tax outcomes are inherently
uncertain. Accordingly, it is recognised that there will be areas of differing legal
interpretation with tax authorities and where this occurs IMI will engage
in proactive discussion to obtain early resolution and seek to remove
uncertainty and controversy.
IMI Tax Policy requires compliance, fairness, value and transparency in the
management of the Company’s tax affairs, in accordance with the principles
of The IMI Way. This approach has been approved by the Board, fully
communicated to subsidiary businesses and is regularly reviewed to
ensure responsible business practices across the Group are maintained.
2.4.2
UK corporation tax
The average weighted rate of corporation tax in the UK for the 2014 calendar
year was 21.5% (2013: 23.25%). Changes enacted in previous Finance Acts
revise the main rate of UK corporation tax to 20% from 1 April 2015. UK
deferred tax assets and liabilities have therefore been calculated using a rate
of 20% (2013: 20%). The current tax charge for UK companies was £2.0m
(2013: £7.1m). During the year the Company made significant additional
payments to its UK defined benefit pension schemes, which has had the
effect of reducing the Group’s UK corporation tax liability for the year.
2.4.3
Tax payments
During the year, the Group made payments of corporate income tax of £67.2m
(2013: £41.7m), principally arising in the USA, UK, Italy, Switzerland, Sweden,
Japan and Germany. There is normally an element of volatility in the annual
payments of corporate income taxes due to the timing of assessments,
acquisitions and disposals, exceptional items and payments on account
in the many countries in which the Group operates. In addition, the Group
makes substantial other tax payments relating to employment, consumption,
procurement and investment to local authorities around the world.
2.4.4
Recognised in the income statement
This section sets out the current and deferred tax charges, which together
comprise the total tax charge in the income statement.
2014
£m
2013
£m
Current tax charge
Current tax charge
46.3
98.4
Adjustments in respect of prior years
(3.4)
(1.4)
42.9
97.0
Deferred taxation
Origination and reversal of temporary differences
12.5
(2.3)
Total income tax charge
55.4
94.7
The above income tax charge is apportioned between continuing and
discontinued operations in the income statement as follows:
2014
£m
2013
£m
Current tax charge
Continuing operations
39.9
59.6
Discontinued operations
3.0
37.4
42.9
97.0
Deferred tax charge/(credit)
Continuing operations
13.0
(3.9)
Discontinued operations
(0.5)
1.6
12.5
(2.3)
2014
£m
2013
£m
Total income tax charge
Continuing operations
52.9
55.7
Discontinued operations
2.5
39.0
55.4
94.7
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