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Tax Strategy

Overview

The group’s tax strategy is set about below in respect of the UK legislative requirements under Schedule 19 of the Finance Act 2016 for groups to publish their UK tax strategy.

The group’s activities are predominantly based outside the UK. All activities in the UK are carried out by Kobayashi Healthcare Europe Limited (‘KHE’), a subsidiary of Kobayashi Pharmaceutical Co. Ltd whose headquarters are located in Osaka, Japan.

KHE qualifies is a medium company under the Companies Act 2016. The tax strategy set out below applies to all UK taxes applicable to KHE.

This tax strategy applies to the financial year ending 31 December 2026 and will be reviewed and republished annually in line with Schedule 19 FA 2016 requirements.

 

Approach of KHE to risk management and governance arrangements in relation to UK taxation.

  • The main tax risks relating to KHE are considered to be compliance and transactional risks. Compliance risks relate to having sufficient systems and procedures in place to ensure tax returns are completed accurately and that submission of returns and payment of relevant taxes are made within the required timeframe. Transactional risks relate to ensuring that all potential tax consequences arising from the transactions of KHE are identified and acted upon in the appropriate manner.
  • The responsibility of the group’s UK tax strategy, risk management and governance initially sit with the directors of KHE. The group CFO has ultimate responsibility over UK tax governance.
  • As part of KHE’s governance arrangements, professional advisors are used to aid those charged with governance and help ensure that they are kept abreast of any tax matters or changes in legislation that effect the group.
  • KHE maintains internal controls over tax, including periodic reviews of tax processes, documented procedures for key tax cycles (corporation tax, VAT, PAYE) and escalation routes to senior management when appropriate. The tax strategy and control framework are reviewed regularly to ensure ongoing compliance with HMRC governance expectations. KHE utilize a third-party advisor to provide a professional review of our submissions to HMRC

 

The attitude of the group towards tax planning (so far as affecting UK taxation).

  • The group is committed to observing all relevant laws, rules and regulations and recognises its responsibilities to ensure that the correct amount of tax is paid in each jurisdiction in which it is present. The group also recognises its responsibilities to stakeholders and to ensure that its tax affairs are managed in an efficient way.
  • Any tax planning arrangements are considered based on the group’s commercial objectives and its brand, reputation, and wider social responsibilities.
  • The group’s UK taxation affairs are considered to be relatively simple and do not contain any complex or unusual tax planning arrangements, the group does not engage in artificial transactions, the main purpose of which is to reduce UK tax.
  • The Kobayashi group has engaged specialist 3rd party advisor to provide a report on intercompany transactions across different jurisdictions, The objective of which is to evaluate the arms-length nature of these transactions and ensure that the operating margin on these transactions fall within an arm’s length range.

 

The level of risk in relation to UK taxation that the group is prepared to accept.

  • The group is conservative with respect to the level of risk it is prepared to accept in relation to its tax affairs.
  • KHE aims to reduce risks as far as possible by submitting UK tax returns on a timely and accurate basis, paying the correct amount of tax in advance of payment deadlines, and ensuring that suitable professional advisors are engaged and that all departments involved in UK taxation matters are appropriately resourced and supported.
  • Although the group’s UK taxation affairs are relatively straightforward situations may arise that require judgements over tax rules that can involve a degree of subjectivity and therefore carry a level of risk. Where this is the case and when appropriate the group will seek advice from professional advisors and if necessary, contact and seek clearance from HMRC to ensure any tax risks are at an appropriate level. Whenever possible KHE aims to avoid material uncertainty in tax positions. Where uncertainty cannot be eliminated, matters are documented and assessed using HMRC guidance and professional input before positions are finalised.

 

The approach of the group towards its dealings with HMRC.

  • The group is committed to maintain a strong relationship with HMRC and believes in the principles of openness and transparency when dealing with tax authorities.
  • Given the relatively small size of the group’s UK operations there has not been a significant amount of specific correspondence with HMRC, outside of the scope of general tax compliance. However, if significant transactions arise, KHE aims to engage with HMRC on a timely basis to obtain clarity and reduce uncertainty. We commit to full, accurate and timely disclosure in all filings and correspondence, consistent with HMRC’s cooperative compliance mode.