Flybe Group plc Tax Strategy
Flybe is Europe’s leading regional airline acting responsibly and generating value for all our stakeholders. We believe in giving our customers great service and value and making a wider contribution to the community in which our business operates in part through the taxes that we pay.
In this document, Flybe sets out its strategy for conducting its tax affairs and managing tax risk.
Flybe has undertaken a formal review of its key tax procedures and now publishes its tax strategy in accordance with measures contained in section 161 and Schedule 19 of Finance Act 2016.
The strategy has been approved by the Board of Flybe Group plc and will be reviewed annually.
Flybe Group’s approach to risk management and governance arrangements
The Group’s policy is to comply with all relevant laws, rules, regulations, reporting and disclosure requirements and to pay the amounts of tax legally due. The Group manages its tax affairs in line with its core values.
Tax risk management is fundamental to Flybe. Tax matters are proactively managed by having a clear internal governance framework, together with business controls and processes.
The Chief Finance Officer is responsible for management of the Group’s tax affairs. He is also the Senior Accounting Officer. He is supported by the Group Financial Controller and Group Tax Manager. Tax compliance is monitored monthly as part of the monthly reporting cycle.
Flybe Group follows a policy of continuous improvement and work is ongoing to identify and review key tax risks and to enhance tax systems and processes in support of Flybe’s tax returns and compliance obligations. Risk issues are reported monthly to the Group Financial Controller and Chief Finance Officer under the Group’s Risks and Opportunities’ procedures. Internal systems, processes and controls are reviewed annually, led by the Group Financial controller and reported to the Chief Finance Officer.
Professional advice is obtained from suitably qualified external advisors where the tax treatment of specific items is uncertain. The Group’s annual Corporation Tax returns are prepared by external advisors and reviewed for accuracy and completeness by the Group Tax Manager and Group Financial Controller before submission to HMRC.
The Audit Committee Chairman is consulted when required, and the Audit Committee reviews an annual report on the tax affairs of the Group. Any significant tax issues arising during the year are brought to the attention of the Audit Committee separately.
Flybe Group’s attitude towards tax planning
Flybe makes tax decisions which support and are consistent with the group’s overall strategy to maximise after-tax returns for its shareholders.
Flybe’s strategy is to be a world-class regional airline, occupying a distinctive niche in European aviation. The Group will deliver this by remaining focused on delivering regional connectivity with high frequency, low volume, short hop routes which mainstream airlines are unable to serve effectively.
The Group takes into account tax costs and risks before key business decisions are implemented. Flybe will use incentives and reliefs to minimise the tax costs of its business activities and consider alternative approaches which may result in differing tax outcomes. However, it will not use them in a way which is knowingly contrary to the intentionsof parliament.
We contribute to tax policy discussions, individually and through industry groupings. One area where Flybe as a regional carrier is particularly disadvantaged against long haul competitors and other modes of transport is Air Passenger Duty (APD). APD disproportionately effects Flybe because it has a much higher customer impact on regional flights compared to long haul and rail fares. We continue to argue for APD to be levied more equitably and for a level playing field between different transport operators.
The level of tax risk that Flybe Group is prepared to accept
Flybe Group aims to comply with all relevant tax laws and to interpret tax laws in a reasonable way and in a way that is consistent with their intention. The Group does not engage in aggressive tax planning schemes.
Material business decisions are adjudged on an after-tax basis. The Group’s procedures and controls are designed to ensure that tax planning is commercially driven and to eliminate the risk of significant errors in tax returns.
Flybe Group’s approach toward its dealing with HMRC
Flybe is committed to acting with integrity at all times and to maintaining a transparent, open and honest relationship with HMRC.
The Group has considered the Draft Framework for Cooperative Compliance published by HMRC in December 2015 which addresses the relationship between large businesses and HMRC and promotes best practice in tax governance.
Flybe is committed to the following principles set out in the Draft Framework and has aligned its tax strategy accordingly:
- To promote collaborative professional working building an open, transparent and trusted relationship;
- To engage in open and early dialogue to discuss tax planning, strategy, risks and significant transactions and to disclose any significant uncertainty in relation to tax matters;
- To respond to queries, information and clearance requests in a timely manner and to ensure that HMRC are informed about how issues are progressing;
- To seek to resolve issues in real time and before returns are filed if possible;
- To make fair, accurate and timely disclosure in tax returns and correspondence;
- To work proactively with HMRC to resolve any disagreements over tax that may arise by agreement where possible;
- To be open and transparent with regards to decision making, governance and tax planning;
- To structure transactions in a way which will have tax results that are not inconsistent with the underlying consequences (unless specific legislation is intended to give that result) and which we believe give a result which is not contrary to the intentions of Parliament;
- To interpret tax laws in a reasonable way and ensure transactions are structured in a way that is consistent with a relationship of cooperation with HMRC.