National Grid 2014 Annual Report Download - page 108

Notes to the consolidated
financial statements continued
Unaudited commentary on taxation
Tax strategy
National Grid manages its tax affairs in a proactive and
responsible way in order to comply with all relevant legislation
andminimise reputational risk. We have a good working
relationship with all relevant tax authorities and actively engage
with them in order to ensure that they are fully aware of our view
of the tax implications of our business initiatives. Management
responsibility and oversight for our tax strategy, which is
approved by the Finance Committee, rests with the Finance
Director and the Global Tax and Treasury Director who monitor
our tax activities and report to the Finance Committee.
Total UK tax contribution
National Grid has taken the decision to provide additional
information in respect of its total UK tax contribution and first
disclosed this in last year’s annual report. This year we have
againdisclosed information in respect of our total UK tax
contribution for consistency and to aid transparency in an area
inwhich there has been increasing public interest. As was the
case in the prior year, the total amount of taxes we pay and
collect in the UKyear on year is significantly more than just the
corporation tax which we pay on our UK profits. Within the total,
we again include significant other taxes paid such as business
rates and taxes on employment together with employeetaxes
and other indirect taxes.
For 2013/14 our total tax contribution to the UK Exchequer was
£1.4bn (2012/13: £1.2bn). Taxes borne in 2014 were £733m, an
8% increase on taxes borne in 2013 of £678m and primarily due
to higher corporation tax payments in the current year. Our 2012/13
total tax contribution of £1.2bn resulted in National Grid being the
17th highest contributor of UK taxes based on the results of the
Hundred Group’s 2013 Total Tax Contribution Survey, a position
commensurate with the size of our business and capitalisation
relative to other contributors to the survey. In 2012 we were in
16th position. In 2013 we ranked 9th in respect of taxes borne.
Of course, National Grid’s contribution to the UK economy is
broader than just the taxes it pays over to and collects on behalf
of HMRC. The Hundred Group’s 2013 Total Tax Contribution
Survey ranks National Grid in 4th place in respect of UK capital
expenditure on fixed assets and we also rank highly in respect
ofinvestment in research and development. National Grid’s
economic contribution also supports a significant number of
UKjobs in our supply chain.
The most significant amounts making up the 2013/14 total tax
contribution were as follows:
UK total tax contribution 2013/14
Taxes borne £m Taxes collected £m
49
340
329 521
129
21
13
Business rates Other
VAT PAYE and NIC UK corporation tax
Tax transparency
The UK tax charge for the year disclosed in the accounts in
accordance with accounting standards and the UK corporation
tax paid during the year will differ. For transparency we have
included a reconciliation below of the tax charge per the income
statement to the UK corporation tax paid in 2013/14.
The tax charge for the Group as reported in the income statement
is £284m (2012/13: £557m). The UK tax charge is £51m (2012/13:
£307m) and UK corporation tax paid was £329m (2012/13:
£243m), with the principal differences between these two
measures as follows:
Year ended 31 March
Reconciliation of UK total tax charge
to UK corporation tax paid
2014
£m
2013
(restated)1
£m
Total UK tax charge (current tax £346m
(2013:£289m) and deferred tax £295m
credit (2013: £18m charge)) 51 307
Adjustment for non-cash deferred
tax credit/(charge) 295 (18)
Adjustment for the current tax credit in
respectof prior years 917
UK current tax charge 355 306
UK corporation tax instalment payments
inrespect of current year not payable
untilthe following year (179) (155)
UK corporation tax instalment payments in
respect of prior years paid in current year 153 92
UK corporation tax paid 329 243
1. All comparatives restated for IAS 19 (revised). See note 1 on page 92.
Tax losses
We have total unrecognised deferred tax assets in respect of
losses of £280m (2012/13: £335m) of which £274m (2012/13:
£319m) are capital losses in the UK as set out on page 105. These
losses arose as a result of the disposal of certain businesses or
assets and may be available to offset against future capital gains
in the UK.
Development of future tax policy
We believe that the continued development of a coherent and
transparent tax policy in the UK is critical to help drive growth
inthe economy.
We continue to contribute to research into the structure of
business taxation and its economic impact by contributing to the
funding of the Oxford University Centre for Business Taxation at
the Saïd Business School.
We are a member of a number of industry groups which
participate in the development of future tax policy, including the
Hundred Group, which represents the views of finance directors
of FTSE 100 companies and several other large UK companies.
Our Finance Director is Chairman of its Tax Committee. This helps
to ensure that we are engaged at the earliest opportunity on
taxation issues which affect our business. For example, in the
current year we have engaged with and responded to a number
of HMRC consultations, the subject matter of which has a direct
impact on taxes borne or collected by our business, and reviewed
numerous others with a potential impact.
This unaudited commentary does not form part of the financial statements.
106 National Grid Annual Report and Accounts 2013/14