Holiday Inn 2014 Annual Report Download - page 175

However, an individual who is domiciled in the US (for the purposes
of the Estate and Gift Tax Convention (Convention), and is not a UK
national as defined in the Convention will not be subject to UK
inheritance tax (to the extent UK inheritance tax applies) in respect
of the ordinary shares or ADSs on the individual’s death or on a
transfer of the ordinary shares or ADSs during their lifetime,
provided that any applicable US federal gift or estate tax is paid,
unless the ordinary shares or ADSs are part of the business
property of a UK permanent establishment or pertain to a UK fixed
base of an individual used for the performance of independent
personal services. Where the ordinary shares or ADSs have been
placed in trust by a settlor, they may be subject to UK inheritance
tax unless, when the trust was created, the settlor was domiciled
in the US and was not a UK national. If no relief is given under the
Convention, inheritance tax may be charged on death and also on
the amount by which the value of an individual’s estate is reduced
as a result of any transfer made by way of gift or other undervalue
transfer, broadly within seven years of death, and in certain other
circumstances. Where the ordinary shares or ADSs are subject
to both UK inheritance tax and to US federal gift or estate tax,
the Convention generally provides for either a credit against
US federal tax liabilities for UK inheritance tax paid or for a credit
against UK inheritance tax liabilities for US federal tax paid,
as the case may be.
UK stamp duty and SDRT
Neither stamp duty nor SDRT will generally be payable in the
UK on the purchase or transfer of an ADS, provided that the ADS
and any separate instrument or written agreement of transfer are
executed and remain at all times outside the UK. UK legislation
does however provide for stamp duty (in the case of transfers)
or SDRT to be payable at the rate of 1.5 per cent on the amount
or value of the consideration (or, in some cases, the value of the
ordinary shares) where ordinary shares are issued or transferred
to a person (or a nominee or agent of a person) whose business
is or includes issuing depositary receipts or the provision of
clearance services. In accordance with the terms of the deposit
agreement, any tax or duty payable on deposits of ordinary shares
by the depositary or by the custodian of the depositary will typically
be charged to the party to whom ADSs are delivered against
such deposits.
Following litigation on the subject, HMRC has accepted that it will
no longer seek to apply the 1.5 per cent SDRT charge when new
shares are issued to a clearance service or depositary receipt
system on the basis that the charge is not compatible with EU law.
In HMRC’s view, the 1.5 per cent SDRT or stamp duty charge will
continue to apply to transfers of shares into a clearance service
or depositary receipt system unless they are an integral part of
an issue of share capital. This view is currently being challenged
in further litigation. Accordingly, specific professional advice
should be sought before paying the 1.5 per cent SDRT or stamp
duty charge in any circumstances.
A transfer of the underlying ordinary shares will generally be
subject to stamp duty or SDRT, normally at the rate of 0.5 per cent
of the amount of value of the consideration (rounded up to the next
multiple of £5 in the case of stamp duty). A transfer of ordinary
shares from a nominee to its beneficial owner, including the
transfer of underlying ordinary shares from the depositary to an
ADS holder, under which no beneficial interest passes, will not be
subject to stamp duty or SDRT.
US backup withholding and information reporting
Payments of dividends and other proceeds with respect to ADSs
and ordinary shares may be reported to the IRS and to the US
holder. Backup withholding may apply to these reportable
payments if the US holder fails to provide an accurate taxpayer
identification number or certification of exempt status or fails to
report all interest and dividends required to be shown on its US
federal income tax returns. Certain US holders (including, among
others, corporations) are not subject to information reporting and
backup withholding. The amount of any backup withholding from
a payment to a US holder will be allowed as a credit against the
holder’s US federal income tax liability and may entitle the holder
to a refund, provided that the required information is timely
furnished to the IRS. US holders should consult their tax advisors
as to their qualification for exemption from backup withholding
and the procedure for obtaining an exemption.
Disclosure controls and procedures
As of the end of the period covered by this report, the Group
carried out an evaluation under the supervision and with the
participation of the Group’s management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of the Group’s disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of
the Securities Exchange Act 1934). These are defined as those
controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities
Exchange Act 1934 is recorded, processed, summarised and
reported within the specified periods. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded
that the Group’s disclosure controls and procedures were effective.
Summary of significant corporate
governance dierences from NYSE
listing standards
The Group’s statement of compliance with the principles and
provisions specified in the UK Corporate Governance Code issued
by the Financial Reporting Council in the UK in 2012 (the Code) is
set out on pages 70 to 72.
IHG has also adopted the corporate governance requirements
of the US Sarbanes-Oxley Act and related rules and of the NYSE,
to the extent that they are applicable to it as a foreign private
issuer. As a foreign private issuer, IHG is required to disclose any
significant ways in which its corporate governance practices differ
from those followed by US companies. These are as follows:
Basis of regulation
The Code contains a series of principles and provisions. It is not,
however, mandatory for companies to follow these principles.
Instead, companies must disclose how they have applied them
and disclose, if applicable, any areas of non-compliance along with
an explanation for the non-compliance. In contrast, US companies
listed on the NYSE are required to adopt and disclose corporate
governance guidelines adopted by the NYSE.
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STRATEGIC REPORT GOVERNANCE
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
ADDITIONAL INFORMATION