InterGen UK group
UK Sub-group Tax Strategy - Year ended 31 December 2019
InterGen is a leading global power generation company that owns, operates, acquires and develops a portfolio of electric generation plants in countries with investment-grade sovereign debt-ratings. During the year, we owned interests in six operating power plants in two countries. These operating plants consist of four natural gas-fired facilities, three of which utilise combined cycle generation technology, and two low-cost coal-fired facilities. InterGen’s mission is to be a leading energy company generating safe, reliable and sustainable power in the communities in which we operate. We aim to deliver this mission through the establishment of national energy companies known for their integrity, entrepreneurial culture, teamwork, environmental stewardship and commitment to the communities they serve.
In the UK, InterGen owns and operates three gas fired combined cycle power stations with a total capacity of approximately 2.7GW. A new 296.5MW open cycle gas turbine facility was commissioned during 2019. We continue to progress and look for other development opportunities. The entities undertaking these operational and development activities, along with certain associated service entities (referred to collectively as “InterGen UK”), are subject to UK taxes.
Approach to risk management and governance arrangements in relation to UK tax
InterGen UK has been assessed as a Low Risk taxpayer by HM Revenue and Customs (“HMRC”), the UK Tax Authority. InterGen UK values this status and is committed to maintaining the governance and the behaviours that have underpinned this assessment to date.
- InterGen UK is subject to the worldwide group’s Supervisory Board approved Delegation of Authority (“DOA”), which is central to the governance and decision making structure in the organisation. The DOA determines firstly, where the Supervisory Board has determined that a decision can be delegated and secondly, the approvals required at each level of delegation. This process aims to ensure that decisions are made taking account of the risks and mitigants identified by suitably qualified and skilled people at an appropriate level in the organisation.
- The respective Boards of Directors of InterGen UK are ultimately responsible for ensuring that the affairs of these entities are delivered in accordance with this Tax Strategy. Under the DOA, the Tax Director has day to day responsibility for identifying and managing tax risks and approving decisions, in accordance with this Strategy, from a UK tax perspective. Decisions of the entities which relate to matters over defined materiality thresholds also require Supervisory Board level approval.
- InterGen’s worldwide group considers that it has a robust internal controls framework which applies to its financial reporting system. This includes the people, processes and systems required to deliver our Tax Strategy. InterGen’s Chief Financial Officer requires that InterGen UK monitors, maintains and seeks to continuously improve this to ensure compliance, as required, with Senior Accounting Officer legislation.
- Tax risks which are identified in relation to InterGen UK are communicated to UK directors; material risks are communicated to the Audit Committee, Supervisory Board and Shareholders on a timely basis. The Audit Committee aims to ensure that appropriate governance structures are in place to support an effective control environment.
- InterGen UK’s Tax Team is an integral part of the Finance function. While the Tax Team members hold recognised professional qualifications and undertake technical training and other relevant Continuing Professional Development activities, a key part of its risk management activities include identifying specialist technical matters and material uncertainties which may require further consideration to support a tax position or understand a potential risk. The Tax Team will engage specialist external advice, as required, taking account of a number of factors including the amount of tax potentially at stake and the complexity of the issue.
Attitude of the UK group towards tax planning
Integrity is one of InterGen’s core values. InterGen UK is therefore committed to ensuring it is compliant with all applicable tax laws, rules, regulations and reporting requirements that relate to UK tax. We will look to ensure we claim all applicable tax reliefs and benefits where it is beneficial to do so on a timely basis.
InterGen UK will aim to structure its commercial activities to ensure they are optimum from a legal, financial, tax and treasury perspective. While tax is one of a number of factors that is considered when undertaking business transactions, we do not undertake transactions primarily for tax planning purposes.
Level of risk the UK group is prepared to accept in relation to UK tax
InterGen UK considers it has a low tolerance towards tax risk and we value the opportunity to have certainty or early resolution of potential tax issues throughout the lifecycle of our assets. InterGen UK evaluates the existence of risk taking into account factors such as previous experience of the issue, the existence of relevant guidance and precedent and external advisor opinions. Where there is a significant uncertainty, we have sought formal Clearance/Ruling requests where relevant.
Approach of the group towards dealing with HMRC
Consistent with its aim for certainty or early resolution of potential tax issues, InterGen UK is committed to maintaining an open, transparent relationship with HMRC, through proactive and appropriate interactions with our Customer Compliance Manager (“CCM”) and technical specialists.
We aim to ensure that our tax obligations are delivered on a timely and accurate basis. However, in the event that we discover an error in a submitted return, we will seek to disclose this to HMRC on a voluntary basis. Through this disclosure, we will aim to quantify and settle any additional liabilities due. In addition, we will identify what we believe to be the cause of the error and outline any remedial actions we propose to prevent recurrence.
Approved on 18 December 2019 by the Board of Directors of InterGen Holdings (UK) Limited, on behalf of it and its UK tax resident subsidiaries, in accordance with paragraph 19(2) Schedule 19 Finance Act 2016