This tax strategy was published in December 2023 and Arriva regards this publication as complying with its duty under paragraph 16(2) Schedule 19 FA 2016 in its financial year ended 31 December 2023.
This strategy is expected to remain in place throughout 2024.
Background
Arriva is part of the Deutsche Bahn Group (DB) and is one of the largest providers of passenger transport in Europe, employing nearly 35,000 people across 10 European countries in the UK and Mainland Europe. In October 2023 it was announced that DB and I Squared Capital had signed an agreement for the sale of the whole of Arriva Group to I Squared, a leading global infrastructure investment manager. The transaction is expected to complete in 2024, subject to the customary closing conditions, including the approval of the DB Supervisory Board and the Federal Ministry for Digital and Transport of the Federal Republic of Germany. The anticipated change in ownership is not expected to alter the Arriva Tax Strategy as set out below.
Taxes allow governments to fund essential public expenditure, and the taxes which Arriva’s activities generate are a key part of how Arriva contributes to society.
This strategy sets out the Arriva Group’s approach to tax and details responsibilities in this area. It summarises how Arriva manages risk in relation to tax; its dealings with tax authorities, and its governing principles relating to tax planning and relationships with professional advisors.
Scope of our Tax Strategy
This strategy applies to Arriva Investments Ltd and to all companies which are directly or indirectly majority owned subsidiaries of Arriva Investments Ltd. It applies to the compliance, payment and reporting of all taxes borne and collected by Arriva, the principal ones being corporate income, indirect and employment taxes. This strategy applies until it is superseded and adheres to the overarching principles in place across the DB Group.
Aim
As a responsible business Arriva is committed to:
- Being a responsible tax payer, being straightforward and transparent in relation to all tax matters;
- Paying tax in accordance with all relevant laws and regulations in the territories where it operates;
- Managing its tax affairs in such a way as to deliver the right amount of tax, in the right place and at the right time;
- Taking a zero-tolerance approach to tax evasion and the facilitation of tax evasion; and
- Operating with integrity, honesty and fairness.
These principles are reflected in Arriva’s relationships with tax authorities, including HMRC. In addition to operating with integrity, Arriva seeks to be proactive with tax authorities to ensure the efficient resolution of any issues arising, wherever possible and appropriate.
Governance, Assurance and Tax Risk Management
The Arriva Group CFO and the Arriva Group Chief Accounting Officer are responsible for the management of the tax affairs of the Arriva Group. The Arriva Group Chief Accounting Officer has open and regular access to leaders of all businesses and functions. This facilitates the proper evaluation of the tax consequences of business activities and the identification, monitoring and management of tax risk.
Arriva has an in-house Tax Team which comprises experienced and qualified tax professionals. This team is responsible for supporting Arriva’s UK businesses in the day to day management of their tax affairs. With the assistance of external tax advisors it is also involved in supporting and monitoring tax compliance and reporting requirements in other territories where the scale of Arriva's operations is smaller.
Arriva generally adopts a low risk approach in relation to tax, having regard to the scale and complexity of its business and the volume of transactions impacting tax.
Arriva seeks to reduce the level of tax risk arising from its operations as far as is reasonably practicable by ensuring that reasonable care and control is applied in relation to all processes which could materially affect its compliance with its tax obligations. Arriva seeks to achieve this through initiating and documenting clear policies, standards and guidance, and through the clear allocation of responsibilities between the Arriva Tax Team, the business divisions and professional advisors. Systems, processes and controls are in place to ensure that Arriva has:
- Robust and appropriate tax accounting arrangements; and
- Reasonable procedures in relation to the prevention of the facilitation of tax evasion.
Arriva only adopts positions in its tax returns which are likely to be accepted by local tax authorities.
There are, from time to time, situations where it is appropriate for Arriva to engage the services of suitably qualified professional tax advisors. This typically happens when there is uncertainty as to how the relevant tax law should be applied. Any such professional advisors are expected to respect the underlying principles of the Arriva Tax Strategy.
Any tax risks identified are evaluated and managed by the Arriva Tax Team working with the business divisions, the Arriva Group CFO and the Arriva Group Chief Accounting Officer. The Management Board of Arriva, as well as the DB Group Tax Team, are informed of developments in relation to any significant tax risks on an ongoing basis.
Approach to the facilitation of tax evasion
Arriva is committed to ensuring that it has reasonable procedures in place at all times to prevent the facilitation of tax evasion by anyone acting on its behalf. If any person or business associated with it engages in such activities, Arriva will co-operate fully with the relevant tax authorities in accordance with all applicable regulations.
Approach to tax planning
Arriva uses available tax incentives, reliefs and exemptions in line with tax legislation, provided that this is aligned with the Group’s commercial objectives and respects the framework of this strategy. Arriva does not undertake tax structuring which has no commercial purpose and which leads to legally unintended tax advantages or where tax structuring might harm Arriva’s corporate or social responsibilities, reputation and brand. It will not look to undertake transactions which are subject to the Disclosure of Tax Avoidance Schemes regime or which HMRC may consider fall within the General Anti-Avoidance Rule. Arriva’s intention is to ensure that its transactions and the tax implications arising from them reflect the commercial reality of each situation.
Relationships with tax authorities
An important part of Arriva’s tax strategy is the maintenance and development of strong, transparent and constructive working relationships with local tax authorities (including HMRC). This is effected through various means including:
- Regular meetings and communications in respect of developments in Arriva’s business activities, tax risks and interpretation of law in relation to all relevant taxes;
- Making fair, accurate and timely disclosures in tax returns and correspondence;
- Responding to enquiries and information requests on a timely basis;
- Seeking to resolve issues with HMRC and all other tax authorities on a timely basis; and
- Generally ensuring that all interactions with tax authorities are conducted in an open, collaborative and professional manner.
Approval
This tax strategy was approved for publication in December 2023.