London Stock Exchange - Tax Strategy

1 - Introduction
1.1 Context

This document sets out the strategic tax objectives for London Stock Exchange Group plc and its group undertakings (‘LSEG’ or ‘the Group’).

While individuals and companies have legal obligations to pay tax, those obligations do not, however, extend to paying more than the amount legally required. Companies also have a legal obligation to act in the interests of their shareholders.

Please note that this document is not designed to be an operational manual with detailed instructions on the execution of tax processes. Development and definition of the governance framework and operating procedures which are required to support delivery of the strategic tax objectives are set out in a separate tax governance policy.

The publication of this statement is regarded as satisfying LSEG's statutory obligation under Para 16(2), Schedule 19, Finance Act 2016 for the year ended 31 December 2019.

1.2 Ownership and approval

This strategy is owned by the Group Chief Financial Officer.

1.3 Scope

Generally the tax strategy and strategic objectives are intended to establish a clear and unequivocal approach to all aspects of tax reporting and compliance wherever the company operates.

The tax strategy supports the Group strategy and is focused on ensuring that taxes (and tax risks) are managed to provide sustainable outcomes within the parameters of the Group’s strategic and commercial objectives, and that all tax obligations are complied with in all countries in which the Group operates.

More specifically, in line with the LSEG corporate social responsibility statement, for companies where LSEG holds 50% or more of the share capital, we expect each company to develop and implement detailed policies and procedures that enable these standards to be met, and that reflect the specific character and requirements of their businesses and the environment in which they operate. The same detailed polices and procedures are encouraged where LSEG owns less than 50%.

This strategy applies to:-

A – Taxes payable and reportable including:-

  • Corporate income taxes (including withholding taxes)
  • Indirect taxes
  • Employment taxes payable and reportable to fiscal authorities
  • Stamp taxes
  • National Building Tax
  • Customs and Excise duties

B – Tax reporting activities including:-

  • Tax financial reporting
  • Tax forecasting
2 - Tax Strategy
2.1 High level overview

LSEG is a global financial markets infrastructure business. Its diversified global business focuses on Information Services, Risk and Balance Sheet Management and Capital Formation. The Group supports global financial stability and sustainable economic growth by enabling businesses and economies to fund innovation, manage risk and create jobs. The Group can trace its history back to 1698.

In Capital Markets, the Group operates a broad range of international equity, ETF, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS (a European fixed income market); and Turquoise (a pan-European equities MTF). Through its platforms, LSEG offers market participants, unrivalled access to Europe’s capital markets.

In Information Services, through FTSE Russell, the Group is a global leader in financial indexing, benchmarking and analytic services. The Group also provides customers with an extensive range of data services, research and analytics through The Yield Book, Mergent, SEDOL, UnaVista, XTF and RNS.

Post trade and risk management services are a significant part of the Group’s business operations. In addition to majority ownership of LCH, a multi-asset global CCP operator, LSEG owns CC&G, the Italian clearing house and Monte Titoli, a leading European custody and settlement business.

LSEG Technology develops and operates high performance technology solutions, including trading, market surveillance and post trade systems for over 40 organisations and exchanges, including the Group’s own markets.

LSEG operates an open access model, offering choice and partnership to customers across all of its businesses.

2.2 Business strategy statement

“Building best in class capabilities; creating a global business; and developing opportunities.

Expanding our global presence and business footprint while delivering growth, both through acquisition and organically.”

Our vision and goals establish what we want to achieve as a business, and our tax affairs will be managed to support them. Our principles describe the way we work, and apply equally to how we manage our tax affairs, in particular being open and honest in our dealings with stakeholders and making sure we deliver on our goals, vision, and strategic objectives.

We have high expectations of ourselves, and the relationships we build with our stakeholders. We want to achieve success, and look to grow through positive, global teamwork.

We operate a robust risk management framework across our business, and this approach will also apply to the management of our tax affairs.

LSEG seeks to legitimately control tax costs but is relatively risk adverse and takes qualified advice where appropriate. We will look to structure commercial transactions in the most tax efficient manner.

Our integrity and reputation is vitally important to the Group and so we consider very carefully the reputational impact of our actions in respect of tax. Consistent with the Group’s business principles, we seek to conduct our tax affairs in a manner that is compliant with legal and regulatory requirements.

2.3 Tax strategy statement

Overview

LSEG’s strategy for taxation is centred around four concepts:

  • To ensure that the Group fulfils its fiscal obligations with regard to the administration and payment of all taxes. 
  • To ensure that the Group’s tax affairs are arranged in an efficient manner, whilst remaining compliant with the tax laws of the jurisdictions in which it operates. 
  • To support the delivery of the Group’s corporate and risk management strategies.
  • LSEG does not undertaken purely artificial transactions in order to obtain a tax benefit and will only enter into transactions, which would be fully justifiable should they become public. Furthermore, all transactions must have a business purpose or commercial rationale.

We understand that collecting and paying tax is an important contribution to the economies and societies in which our businesses operate. LSEG believes its obligation is to pay the amount of tax legally due in any territory, in accordance with rules set by governments.

Tax is a business expense which needs to be managed, like any other, and therefore LSEG may respond to legitimate tax incentives and statutory alternatives offered by governments. We will utilise tax incentives or opportunities for obtaining tax efficiencies where these:

  • Are of a type that the tax authorities would expect;
  • Are aligned with business or operational objectives; and
  • Do not carry significant reputational risk or significant risk of damaging our relationship with the fiscal authorities in the key jurisdictions in which we operate.

Due consideration will be given to LSEG’s reputation, brand, corporate and social responsibilities when considering tax initiatives, as well as the applicable legal and fiduciary duties of directors and employees of LSEG.

We will operate with integrity in our compliance and reporting. Compliance with all relevant legal disclosure and approval requirements will be adopted and all information will be clearly presented to the tax authorities or other relevant bodies, as appropriate. Openness, honesty and transparency will be paramount in all dealings with tax authorities and other relevant bodies.

Relationship with Tax Authorities

It is LSEG’s general policy to be transparent and proactive in all interactions with tax authorities. Our tax teams around the world are required to operate according to a clearly defined set of behaviours, including acting with integrity and communicating openly. The application of this principle should be tailored to each territory style and engagement. Each tax team is encouraged to proactively foster this principle.

We have an open, honest and positive working relationship with tax authorities in the jurisdictions in which the Group operate. We are committed to prompt disclosure and transparency in all tax matters with the authorities. We recognise that there will be areas of differing legal interpretations between ourselves and tax authorities and where this occurs we will engage in proactive discussion to bring matters to as rapid a conclusion as possible.

Control Framework

We will operate an effective tax control framework, focussing on having the right control environment, risk identification, control activities, effective channels of communication and monitoring of our compliance with relevant legislation and our stated strategy. In this context we will develop our people and look to continuously improve how we govern tax in our organisation..

Corporate criminal offence of the failure to prevent the facilitation of tax evasion

The Group has no appetite to fail to prevent the facilitation of tax evasion and therefore the Group maintains an evolving review of procedures and controls to ensure they are reasonable to prevent the facilitation of tax evasion by an associated person of the Group.
The Group has no appetite for its employees/associated persons to fail to comply with internal Group policies and with applicable legal and regulatory requirements.
The Group has no appetite to engage with those that seek to evade tax.