Terex UK Group Tax Strategy
In accordance with Paragraph 16(2), Schedule 19, Finance Act 2016, Terex Corporation sets out below its tax strategy (“Tax Strategy”) for all UK group companies (“Terex UK”) within the Terex worldwide group (“Terex Group”) for the financial year ending 31 December 2021. The Terex UK Tax Strategy applies to the UK taxes that Terex UK is subject to. The Tax Strategy is reviewed annually and updated where required.
Terex Corporation and subsidiaries (“Terex”) is a US multinational corporation that is publicly traded on the New York Stock Exchange and subject to its full regulatory framework. As of 2021 Q3, Terex is comprised of about 90 legal entities incorporated in 31 countries. Terex generates approximately USD 4 billion in annual sales and currently operates in two segments, Aerial Work Platforms (“AWP”) and Materials Processing (“MP”).
As part of Terex Group, Terex UK is aligned with, and follows, the wider Terex guiding principles, code of ethics and conduct, and tax policies. First and foremost, the Terex Way Values demand and support a culture of tax compliance and the Tax Strategy is grounded in the Terex value of integrity and our commitment to comply with all laws and regulations. The Tax Strategy is focused on ensuring that taxes are calculated, and tax risk is managed to provide outcomes consistent with commercial reality, applicable tax law, and that are within the parameters of the strategic objectives of Terex. The Tax Strategy requires that all tax regulations are complied with in the UK and other relevant jurisdictions. The Vice President, Chief Tax Officer (“CTO”) is responsible for management of the tax affairs and global tax risks of the Terex Group. The CTO reports to the Senior Vice President, Chief Financial Officer of Terex.
Risk Management and Governance Arrangements
Responsibility for Terex policy, including tax policy, ultimately resides with the Board of Directors of Terex Corporation. The role of the Board is to focus on strategic direction and oversight of critical business risks, not to direct regular operating activities. Managing tax compliance is an increasingly complex area and the Terex Group, including Terex UK, consistently monitors local and global markets, industry trends, and current and developing tax legislation in order to set tax governance. Terex uses knowledge, detailed processes, and internal controls to reduce tax risk to acceptable levels. As part of governance of tax matters, several arrangements exist, including, but not limited to:
- Quarterly formal certification procedures including the identification, evaluation, monitoring and reporting of tax issues and risks;
- Complying with internal control procedures and processes, which are subject to regular reviews, internal audits and self-assessment;
- Regular communication with UK tax authorities to ensure business risk is managed and provision of mutual assurance around the UK tax activities of Terex, and
- Various reviews and audits of UK tax activities and compliance undertaken by third-party consultants and auditors.
Terex UK Approach to Tax Planning
Terex UK believes it has an obligation to timely and accurately pay its taxes. It seeks to pay no less and no more than required by the application of laws to its facts and operations. The tax planning objectives of Terex UK are to support the commercial needs of the business by ensuring that its operating activities are carried out in the most financially efficient manner whilst remaining compliant with all relevant laws. Terex UK does not engage in transactions for which the purpose is to reduce UK tax. Terex carefully evaluates the impact of tax arrangements on the reputation, corporate, and social responsibilities of Terex UK and Terex Corporation as a whole.
Occasionally, Terex UK will seek further advice from competent external third-party tax advisors to provide assurance around technically complex areas of UK tax in order to adequately assess tax consequences. Consultation ensures that appropriate and technically sound tax decisions are made.
Terex UK and its Tax Risks
Terex UK endeavors to be compliant with tax regulations, requirements, and reporting. Terex UK will not knowingly take tax positions contrary to legislative requirements and thus seeks to minimize the level of risk in relation to UK taxation. Terex UK is focused on reducing the level of tax risk arising from its operations as far as is commercially reasonable by implementing various internal tools and controls for its business units to follow. Terex UK maintains tax accounting arrangements which are robust and enable the business to fulfill its responsibilities under the Senior Accounting Officer provisions in the UK.
Relationship with Her Majesty’s Revenue and Customs (“HMRC”)
Terex UK is committed to complying with its UK tax obligations and seeks to build and sustain an open and transparent relationship with HMRC that is constructive and based on the principles of accuracy, cooperation, compliance, and integrity. Terex UK seeks to comply with its UK tax responsibilities through:
- Submission of accurate tax returns and disclosures;
- Informing HMRC of significant changes in the business conducted by Terex UK;
- Disclosing and discussing uncertainties as and when they arise;
- Focusing on, and seeking to resolve, significant issues, and
- Working collaboratively, co-operatively, and in a timely and professional manner with HMRC and the designated Customer Relationship Manager (“CRM”).
Attitude Towards Tax Evasion
Terex Group prohibits any form of tax evasion for itself, and will not participate or support any form of tax evasion by its customers, suppliers, and associated representatives. Terex Group has policies and procedures that aim to ensure that none of its employees or anyone acting on its behalf facilitate the evasion of tax in the UK or any other jurisdiction.
Like all companies in our industry, Terex Corporation was adversely impacted by the Covid-19 pandemic in many ways. As a result, decisive action was taken to address the threats to the physical health and safety of our team members and a number of controls and measures were put in place to ensure the ongoing financial health of the Company due to the Covid-19 pandemic. The pandemic caused no changes to the UK Strategy or negative impact on Terex UK controls over tax. As and when Terex emerges from the ongoing pandemic and business begins to return to pre-Covid-19 levels, our continued focus remains on controlling what we can control: following rigorous COVID-19 safety protocols; staying connected with customers; proactively maintaining our financial flexibility; and calling upon our Terex Way Values and Zero Harm safety culture as wellsprings of strength for the team.
We are confident that these actions have contributed to, and will continue to contribute to, our sufficient liquidity position throughout the pandemic. Our AWP and MP businesses are industry-leading in their respective segments with very strong brands, they are well positioned as we come out of this downturn to grow in their respective markets.
Date published: December 9, 2021