This tax document fulfils Lockton’s responsibility under paragraph 16 of Schedule 19 to the Finance Act 2016 and defines the Group’s approach to tax management across the Group, covering governance, the Group’s approach to tax risk management, tax planning and relationship with Her Majesty’s Revenue & Customs (“HMRC”).

Lockton's Approach to Tax

Group Overview

The Lockton UK Group contains UK companies owned directly or indirectly by;

– LIH UK Topco Limited or
– LIH UK Topco’s US parent, Lockton Inc.

The principal activities of the Group are insurance broking, reinsurance broking, production, distribution and other related services. The Group trades through two Limited Liability Partnerships, being Lockton Companies LLP (for insurance related services) and Lockton Re LLP (for reinsurance related services), which are both regulated by the Financial Conduct Authority and registered in England and Wales. In this document, references to ‘Lockton’ or ‘the Group’ are to the UK entities.

This tax document fulfils Lockton’s responsibility under paragraph 16 of Schedule 19 to the Finance Act 2016 and defines the Group’s approach to tax management across the Group, covering governance, the Group’s approach to tax risk management, tax planning and relationship with His Majesty’s Revenue & Customs (“HMRC”).

The document will be reviewed annually, and any material amendments will be approved by the relevant board of Directors, namely LIH UK Topco Limited and Lockton Re LLP, collectively the “UK Board” in this document. It is effective for the year ending 30 April 2024 and has been approved by the UK Board.

Governance in relation to UK taxation

Lockton is committed to complying with all statutory obligations and the tax laws in the jurisdictions in which it operates and strives to pay taxes and fulfil compliance obligations on an appropriate and timely basis.

Lockton’s tax affairs are managed in a way which takes into account the group’s wider corporate reputation and Lockton’s decisions are primarily driven by commercial considerations and business realities; tax considerations are secondary to these
commercial transactions.

Roles and responsibilities
The UK Board is ultimately responsible for the overall tax approach and compliance of the group, as put forward by the Group Chief Financial Officer (“CFO”).

Overall executive responsibility for taxation in the group sits with the Group CFO, with support from the Head of Tax and in-house Tax Department. Lockton employs experienced tax professionals who are responsible for ensuring compliance and managing its tax risk on a day to day basis. The in-house Tax Department consists of qualified specialists across a range of tax disciplines and work together to manage Lockton’s approach to tax and tax risk. The Head of Tax reports directly to the CFO who is a member of the UK Board.

The duties of the Tax Department broadly cover the following areas:

  • UK and International corporate taxes;

  • Partnership and Employment taxes;

  • UK and International transaction taxes.

Tax Risk Management

The UK Group’s in-house tax function manages risk by:

  • maintaining a good working relationship with HMRC and keeping close links with the business to identify at an early stage
    any areas of concern;

  • applying professional diligence and care in the management of all risks associated with tax matters, and ensuring governance and assurance procedures are appropriate;

  • consulting with external tax advisors if there is an area of uncertainty or the tax position is material. All tax advisors to the Group are high-quality, professional, and well renowned advisory companies.

Minimising the tax risk also relies heavily on the accounting systems and controls in the underlying businesses. The UK Board is responsible for implementing and monitoring these systems and controls, with delegation to the CFO for the day to day

The Finance Committee, of which the Head of Tax is a member, ensures financial policies and procedures are followed. The Finance Committee has delegated authority from the UK Board for reviewing and/or approving key financial actions with respect
to the operations of the Group.

The internal audit team regularly assesses and tests these controls, and reports to the audit committee. External auditors provide an opinion on the UK Group companies’ results on an annual basis, which includes tax amounts and disclosures.

Tax Planning and risk appetite

Overall, the UK Group’s appetite for tax risk is low and it structures its affairs based on sound commercial principles by ensuring:

  • Lockton pays the right amount of tax at the right time as required under the laws and regulations of the countries in which it operates;

  • Any structuring that is undertaken will have commercial and economic substance and will have full regard to the potential impact on Lockton’s reputation and broader goals;

  • When entering into commercial transactions, Lockton seeks to take advantage of available tax incentives, reliefs and exemptions in line with, and in the spirit of, tax legislation;

  • Lockton will not put in place any arrangements that are contrived or artificial;

  • External tax advisors are utilised, where required, to ensure adherence to local tax legislation.

The Group is prudent about the level of tax risks deemed to be acceptable and, in general, seeks to reduce tax risks by the
following mechanisms:

  • Avoidance of aggressive tax planning;

  • Undertaking transactions that fairly reflect the economic substance of the Group’s core businesses.

The Group’s internal governance is not prescriptive on a particular level of tax risk that the Group is prepared to accept when considering a transaction. However, by engaging in transactions that have a genuine economic substance, the Group aims to manage its future tax risks to minimise the chances of future unexpected tax charges relating to historical transactions.

Lockton Companies LLP & Lockton Re LLP expects its members to fully comply with their obligations in respect of UK taxation and has engaged an external advisor to complete the individual tax returns of its members.

Relationships with tax authorities

Lockton is committed to the principle of cooperation in its approach to dealing with tax authorities wherever it operates around the world. HMRC is the primary tax authority with which the Group has dealing.

When liaising with HMRC, Lockton:

  • take a collaborative approach when discussing tax compliance, risks, events, and interpretations of the law with HMRC;

  • have regular contact and meetings with the Lockton Customer Compliance Manager at HMRC. This ensures HMRC are always up to date and have received the relevant notifications and information regarding any changes;

  • respond to queries and information requests in a timely fashion;

  • seek to resolve issues with HMRC in real time and before returns are filed if possible, and where disagreements arise, work with HMRC to resolve issues by agreement (where possible);

  • reasonably believe that transactions are structured to give a tax result which is not inconsistent with the economic consequences (unless specific legislation anticipates that result), nor contrary to the intentions of Parliament; and

  • interpret the relevant laws in a reasonable way, and ensure transactions are structured consistently with a co-operative relationship.

When submitting tax computations and returns to HMRC, Lockton discloses all relevant facts and identifies transactions or issues where it considers that there is potential for the tax treatment to be uncertain.

Errors in submissions made to HMRC are fully disclosed in line with HMRC guidance as soon as reasonably practicable after they are identified.

This content was updated in 2024.