Tax Strategy

Overview of our business

Halma is a multinational business headquartered in the United Kingdom with a decentralised structure comprising a small head office team and locally managed autonomous operating companies. Our strategy is to acquire and grow businesses in relatively non-cyclical, specialised global niche markets.

Aims

This Tax Strategy (“Strategy”) follows the principles of our Code of Conduct and aims to support:

• Halma’s worldwide business operations.
• Compliance with the applicable tax legislation in the countries in which we operate.
• Our Senior Accounting Officer (“SAO”) in submitting to Her Majesty’s Revenue & Customs (“HMRC”) the annual tax compliance certificate required for large businesses under legislation introduced in 2009 in the UK.

Scope

This Strategy applies to all:

• Taxes (both direct and indirect) in the countries in which we operate.
• Directors, employees and third parties (including external advisors and service providers) whose actions affect Halma’s tax affairs.

Approach to working with tax authorities

Halma is committed to maintaining a good working relationship with tax authorities (including HMRC) based on compliance, transparency, co-operation and proactive engagement to minimise tax risk. Specific aspects of our approach to tax authorities in relation to tax compliance and tax planning are described further below.

Tax compliance

Halma is committed to compliance with the tax legislation in the countries in which we operate. Compliance for us means paying in full and in a timely manner all taxes that are due. A requirement of our commitment is that full disclosure will be promptly made to the tax authorities if errors arise in relation to our tax liabilities.

Tax planning

Halma is focussed on undertaking the commercial transactions (for example, acquisitions) which arise from its business model in a tax efficient manner. Specifically, this means that Halma will not engage in tax-motivated transactions or put in place arrangements that are contrived or artificial.

We are prepared to discuss tax planning with external advisors to the extent that such planning is aligned with this Strategy. However, the main reason Halma seeks external advice is to support our commercial decision-making process where the tax position appears to be unclear or we do not have the expert knowledge required to fully assess the tax consequences.

Making acquisitions as part of our business model means that we may acquire trading companies in countries with low tax rates. Furthermore, when making acquisitions and disposals, the group will consider the associated tax consequences including those relating to the appropriate legal and financing structure.

Halma’s business model, comprising locally managed autonomous operating companies, supports our transfer pricing policy of ensuring that transfers of goods and services between Group companies are on an arm’s length basis.

Risk management

Halma’s tax risks occur in the following areas:

• Transactional – the application of tax laws to specific transactions.
• Compliance – our tax accounting arrangements (including recording transactions) and processes for making tax payments, filing tax returns and responding to questions from tax authorities.
• Operational – arising from our routine, everyday business operations.
• Financial accounting – the process for arriving at the tax balances included in the Group’s Annual Report and Accounts.

Although the group does not have rigid levels of acceptable tax risk, it seeks to operate on a low tax risk basis and will not engage in transactions that are considered to be high risk. When considering tax risk, the group takes into account our corporate and social responsibilities, any impacts on our relationships with tax authorities and on our reputation.

Group wide risks are managed centrally. Halma’s operating structure means that our operational tax risks are managed by the Finance Directors (“FDs”) of each of our worldwide operating companies supported by our UK Head Office. We have a formal tax policy which sets out the responsibilities of the FDs and the situations when approval from Head Office is required. Compliance with this policy is monitored by the UK head office, with the FDs also certifying their compliance each year.

Regular meetings are held with our tax advisors to ensure that we are aware of legislative changes. Advisors will also be consulted in relation to non-routine transactions (for example, tax advice on land and property transactions).

Further to the principles in our Code of Conduct and tax policy, Halma has a zero-tolerance policy on tax evasion including the activities which facilitate it. Consequently, Halma is committed to ensuring that its businesses meet the compliance obligations of the UK corporate criminal offence of failure to prevent the facilitation of tax evasion.

Governance

Halma’s Chief Financial Officer is ultimately responsible for this Strategy and is the SAO for our UK companies. The Strategy is overseen by the Halma plc board which receives regular updates, either directly or through the Audit Committee, from the Chief Financial Officer.

Day to day delivery of the Strategy rests with the Group Tax team, which supports our worldwide business operations in their tax matters and works closely with our external advisors and HMRC.

This Strategy was approved by the Board of Halma plc on 25 January 2024 to come into immediate effect. Re-approval will be sought from the Board for any changes.

Halma plc regards the publication of this document on 30 January 2024 as satisfying its duty to comply with Paragraph 16(2), Schedule 19 of the UK Finance Act 2016 in respect of the year ended 31 March 2024.