Munich Re Underwriting Limited

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Munich Re Specialty Group Limited –
UK Tax Strategy1

Introduction

At Munich Re Specialty Group Limited (see Appendix for complete list of companies) we attach great importance to responsible and sustainable company management. Corporate Governance as well as sustainable risk management direct our day-to-day actions and help determine long-term strategic decisions. In addition, Corporate Responsibility is an essential component of our Group and our strategy is built on "Company success through responsibility". Furthermore, Munich Re’s (our parent company’s) Code of Conduct binds our management and staff to engage in ethically and legally impeccable conduct. 

In terms of our attitude towards taxation, Munich Re Specialty Group Limited is a fair and reliable partner to its clients, its employees, its shareholder and all other external regulatory compliance parties (including HM Revenue & Customs ("HMRC")). We are committed to acting in a prudent and responsible manner. We are an open, transparent and dependable taxpayer.

Our approach to risk management and governance arrangements in relation to taxation

As taxation is a key element of meeting our wider business objectives the Directors of our various UK business operations provide leadership in respect of our approach to taxation. In addition, as our businesses are regulated in the UK by FCA, PRA and other regulatory bodies, we also ensure that tax risk management is embedded into our working practices via our Internal Control System (ICS). 

We have a robust process in place for identifying and addressing tax risks across all areas of our business. This involves engagement with all key internal stakeholders (Finance (Tax), Insurance and HR). The Finance sub Committee (FSC) which has delegated authority from the Executive Committee who in turn has delegated authority from the Board, meets on a regular basis to discuss various financial issues including tax. Due to the international corporate structure, we ensure that we remain connected on a global basis and that appropriate arm’s length pricing is in place for cross border transactions.  

Our internal review system (and as appropriate, external assistance) supports the various Senior Accounting Officers in certifying to HMRC that we have appropriate tax accounting arrangements. Additionally, all tax returns and other submissions to HMRC are checked and validated internally prior to submission (the exception being IPT which is outsourced to Lloyds in line with the rest of the market). Where we assess that we do not have the necessary in-house capabilities to fulfil our tax compliance requirements we appoint external advisors to help manage this tax risk. 

We obtain advice from appropriately qualified external advisors on specialist UK and non-UK tax matters such as transfer pricing, direct & indirect tax and employment tax matters which form part of our tax return processes and UK tax obligations. This supplements the skills of our own Finance team where appropriate. In addition, for all UK taxes we ensure adequate training is provided to help identify new and emerging risks. For all tax processes there are clear accountability, reporting and escalation lines in place with Group Tax in Germany acting as a second line of defence.

We have historically been categorised by HMRC as a not low-risk business, although we are at the lower end of the non-low risk spectrum.  This classification reflects the complex business structure of the Munich Re UK Group. 

1 This strategy applies for the year ended 31 December 2017. It has been prepared in accordance with the requirements of Finance Act 2016 and applies to all companies within the Munich Re Specialty Group Limited.

Tax risk appetite

As with our broader business risk appetite we have a low tolerance towards tax risk (across all taxes), and do not make use of tax planning which does not support genuine commercial activity. We seek to minimise the risk of a dispute with HMRC by being open and transparent about our tax affairs.

The tax consequences of significant transactions (including internal restructuring and changes to IT systems) are considered by the senior stakeholders as part of its deliberations on the transactions in question. Wherever relevant we would also seek the opinion of external advisors to ensure that the tax impacts of any transactions are aligned to our Corporate Responsibilities.

We manage our ongoing and future tax risk by meeting regularly with HMRC to discuss significant current and recent transactions and to share details of any proposed significant transaction with them prior to implementation. In cases of significant uncertainty, we would seek advance clearance from HMRC.

Our approach towards our dealings with HMRC

We are committed to maintaining an open, transparent and collaborative approach to our dealings with the tax authorities. In the UK, we engage with HMRC through our Customer Relationship Manager to discuss our tax affairs. Across all tax processes we ensure consistency in approach and reporting through coordination across all the different UK businesses. 

We take care to ensure that our tax affairs are reported accurately. If we were to identify an error in a submitted tax return, we would seek to voluntarily disclose it, quantifying the effect of the error and paying any additional tax and interest that becomes due as a result.

In summary, all entities within the Munich Re Specialty Group Limited are committed to ensuring they pays the right amount of tax in the UK and other territories and to working collaboratively with the relevant tax authorities e.g. HMRC.

Country by country reporting

This is part of the OECD (Organisation for Economic Co-operation and Development) initiative to require large multinational enterprises (MNE) to report details of taxes paid in each territory where they have a permanent establishment (PE) and to enable these territories to share the information. This is applicable to all MNEs having consolidated annual revenue greater than €750 million. The Munich Re Group falls into this category and therefore all group companies must comply with the Country by Country reporting requirements.

The information will be coordinated on behalf of the group companies across the world by Munich Re AG (the parent) and submitted to the Finanzamt Muenchen, Abteilung Koerperschaften (German tax authority) who in turn will share it with the relevant tax authorities e.g. HMRC. The Munich Re Holdings (UK) Group companies are required to provide Munich Re AG with the necessary information. The relevant tax authorities e.g. HMRC also need to be notified that the information will be filed centrally by Munich Re AG in Germany.

Appendix

List of companies covered by the tax strategy

  • Munich Re Capital Ltd (including Syndicate 457)
  • Munich Re Syndicate Ltd (managing agent)
  • Roanoke International Brokers Ltd (RIBL)
  • NMU Group Ltd and their subsidiaries
    • N.M.U. (Holdings) Ltd
    • Northern Marine Underwriters Ltd
  • MRHCUK Dormant No. 1 Limited
  • Groves, John & Westrup Ltd (GJW)
  • Munich Re Syndicate Hong Kong Ltd (MRSHK)
  • Munich Re Syndicate Labuan Ltd (MRSLAB)
  • Munich Re Syndicate Middle East Ltd (MRSME)
  • Munich Re Syndicate Singapore Ltd (MRSS)
  • Roanoke Group Inc.

Information

Syndicate 457 at Lloyd's, managed by Munich Re Syndicate Limited is authorised by Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority.


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