This Tax Strategy describes the management of all UK entities within the LKQ Corporation group of companies (references to “LKQ UK” include all such UK entities). LKQ is a publicly traded (NASDAQ: LKQ) U.S. based multinational corporation, headquartered in Chicago, Illinois.
In accordance with the requirements of UK Finance Act 2016 Schedule 19, paragraph 19, Euro Car Parts Limited and Arleigh Group Limited present the LKQ UK’s Tax Strategy for the year ending on 31 December 2022. This tax strategy is reviewed annually.
The tax strategy is approved by the boards of Euro Car Parts Limited and Arleigh Group Limited, LKQ UK’s principal group and holding companies, and it sets out LKQ UK's approach to UK taxation. References to “UK tax” and “UK taxation” are to the taxes and duties in the UK, including, inter alia, corporate income taxes, indirect taxes, and employment related taxes.
The Vice President – Tax of LKQ Corporation, as LKQ’s global chief tax officer, has primary responsibility for oversight of the tax affairs of all LKQ companies. The UK tax team is part of a global tax team of professionally qualified and experienced employees. LKQ’s global tax department is part of the finance function and reports to the LKQ Corporation Chief Financial Officer. Additional oversight is provided by the Audit Committee of LKQ Corporation’s Board of Directors. The implementation of the UK tax strategy is the responsibility of the UK Chief Financial Officer, supported by the UK Head of Tax.
LKQ UK’s practice is to ensure compliance with UK tax laws and regulations and practices. The overall UK tax strategy includes the following:
LKQ is committed to uphold ethical standards in all its corporate and business activities. LKQ’s internal Code of Ethics, published on LKQ Corporation’s website, underpins LKQ UK's approach to UK taxation. LKQ maintains internal policies and procedures to support its tax controls and ensure compliance with the U.S. Sarbanes-Oxley Act and the UK’s Senior Accounting Officer certification requirements. The LKQ group tax department includes a team of professionals with appropriate qualifications and experience to identify and manage tax risk. Other individuals within the finance function also support the tax department in identifying these risks. The tax department recognizes that UK tax laws and practices are complex and dynamic. Advice may be sought from external professional advisors, where appropriate, to ensure that new tax laws and practices are fully understood, in relation to areas of uncertainty or with regards to a material transaction.
LKQ UK is committed to complying with UK tax laws, regulations and practices when meeting the commercial needs of the business. LKQ UK may utilize tax incentives or reliefs where available, legally permissible, and consistent with the business commercial objectives and operations. Any tax incentives or reliefs are utilized in accordance with the letter and the spirit of the law and will consider any impact that such actions will have on our external reputation.
Whilst LKQ UK does not have rigid levels of acceptable tax risk, LKQ UK's tolerance for tax risks is continually evaluated and managed to ensure LKQ UK is acting in compliance with the letter and the spirit of the law. LKQ UK’s tax strategy aligns with its business strategy and operations, and tax risks are managed in the context of substantive business transactions. LKQ UK continuously monitors its UK operations to ensure compliance with relevant tax laws, including transfer pricing guidelines, and to identify and address material tax risks. Risks are regularly reviewed for changes in business and legislation. LKQ UK maintains relationships with external tax professionals and seeks their advice as needed to confirm the tax department’s internal assessments of tax positions and tax risk.
LKQ UK is committed to maintaining a transparent and constructive relationship with HMRC and seeks to work collaboratively with HMRC to explain the business, obtain certainty on tax matters and resolve disputes. Where issues of differing tax interpretations may arise, LKQ UK will engage in proactive discussions with HMRC to bring matters to conclusion. Where LKQ UK is unable to reach agreement with HMRC on a disputed matter, and provided its position is supported by professional advisors, LKQ UK may seek to resolve the issue through alternative methods of dispute resolution. If inadvertent errors in tax submissions are discovered, LKQ UK’s policy is to notify HMRC as soon as reasonably practicable after such errors have been identified.