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This statement, approved by the Risk Management and Audit Committee ("RMAC") on behalf of the Global Council of Herbert Smith Freehills LLP ("HSF"), sets out the firm's policy and approach to conducting its tax affairs and dealing with tax risk, and is made available to all of HSF's stakeholders. This statement will be periodically reviewed by the firm's Tax and Partner Finance ("T&PF") team and Chief Financial Officer ("CFO"), and any amendments will be approved by the firm's RMAC on behalf of the Global Council. It is effective for the year ending 30 April 2024. This statement meets the requirements of Schedule 19 Finance Act 2016.

The Global Council and the T&PF team work together with the CFO to ensure that:

  • The tax strategy is adopted and followed consistently across HSF, with clear lines of responsibility and accountability;
  • There is alignment of the tax strategy with HSF's overall approach to corporate governance and risk management, and
  • The firm and its partners pay the right amount of tax required of it under the laws and regulations of the countries in which it operates.

The Global Council requires that the firm's tax affairs are managed in accordance with the following principles:

1. Compliance with tax regulations

The firm intends to fulfil its tax obligations in accordance with the tax laws in all of the territories in which it operates, on a timely basis and in a manner that ensures the firm's reputation and ability to trade is protected. Compliance for the firm means paying the right amount of tax in the right place at the right time. It involves disclosing all relevant facts and circumstances to the tax authorities and claiming reliefs and incentives where available.

The firm acknowledges that there may, however, be alternative approaches or interpretations of tax laws that may result in differing tax outcomes. The firm will use its best judgement in determining the appropriate course of action, using available reliefs and incentives where possible.

2. Tax planning

In structuring its commercial activities the firm will consider – among other factors – the tax laws of the countries within which it operates. Any tax planning undertaken will have commercial and economic substance, and will have regard to the potential impact on the firm's reputation and broader goals. The firm will not undertake planning that is contrived or artificial.

3. Relationship with tax authorities

The firm engages with tax authorities, including HMRC, with honesty, integrity, respect and fairness and in a spirit of co-operative compliance. The firm will provide all necessary co-operation to tax authorities where lawfully requested or required. Wherever possible the firm will seek to resolve any disputed matter through pro-active and transparent discussion and negotiation.

4. Best practices in tax matters and tax risk management

The firm manages its tax affairs in accordance within the principles of a formal and diligently observed tax policy. Given the scale of the firm and the resulting volume of tax obligations, tax risks will inevitably arise from time to time in relation to the interpretation of tax law and nature of the firm's compliance arrangements. The firm proactively seeks to identify, evaluate, manage and monitor tax risks to ensure they remain in line with the firm’s risk appetite. Where there is significant uncertainty or complexity in relation to a tax risk, external advice may be sought.

Responsibility and accountability for the firm’s tax affairs is clearly defined and decisions taken at an appropriate level.

Diligent professional care and judgement will be employed to assess tax risks in order to arrive at well-reasoned conclusions on how tax risks should be managed.

The T&PF team employs various risk management processes and systems to provide assurance that the requirements of the firm's Tax Policy are met. This includes compliance and risk monitoring systems, and internal audit reviews of tax compliance.

In reviewing the risks of a tax action or decision, always bearing in mind the requirements of the firm's Tax Policy, the firm would consider the legal and fiduciary duties of partners, directors and employees, professional ethics and standards of conduct set by the Solicitor's Regulation Authority and other relevant professional bodies, and the wider consequences of potential disagreement with tax authorities, and any possible impact on relationships with them.