Policies

Additional tax information for YE 31 December 2023

The net amount of deferred taxation debited to the Consolidated Statement of Comprehensive Income in the year was £3.2 million (2022: debited £0.1 million).

The Group operates in the United Kingdom which has enacted new legislation to implement the global minimum top-up tax. The Group does not expect to be subject to the top-up tax in relation to its operations in these jurisdictions as both the statutory tax rates and adjusted effective tax rates are expected to continue to be above 15 per cent. The newly enacted legislation is only effective from 1 January 2024 so there is no current tax impact for the year ended 31 December 2023.

The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and will account for it as current tax when it is incurred. If top-up tax had been applied in 2023 the Group would not expect that any top-up tax would have arisen.

The majority of the Group’s profits are earned in the UK with an average rate of corporation tax being 23.5 per cent for the year to 31 December 2023. The UK corporate tax rate increased to 25 per cent from April 2023 and the deferred taxation liability at 31 December 2023 has been calculated at 25 per cent, which is the rate at which the deferred tax is expected to unwind in the future.

Capital allowances are tax reliefs provided in law for the expenditure the Group makes on fixed assets. The rates are determined by Parliament annually, and spread the tax relief due over a number of years. This contrasts with the accounting treatment for such spending, where the expenditure on fixed assets is treated as an investment with the cost then being spread over the anticipated useful life of the asset, and/or impaired if the value of such assets is considered to have reduced materially.

The different accounting treatment of fixed assets for tax and accounting purposes is one reason why the taxable income of the Group is not the same as its accounting profit.

Some expenses incurred may be entirely appropriate charges for inclusion in the Financial Statements but are not allowed as a deduction against taxable income when calculating the Group’s tax liability for the same accounting period. Examples of such disallowable expenditure include business entertainment costs and some legal expenses.

The Group’s overseas operations comprise a manufacturing operation in Belgium up until its disposal on 13 April 2023 and sales and administration offices in the USA and China. The sales of these units, in total, were under 5 per cent of the Group’s turnover in the year ended 31 December 2023. In total, the trading profits were not material and a minimal amount of tax is due to be paid overseas.
 

Deferred taxation liabilities and assets are shown in Note 23 to the Financial Statements.

The deferred taxation liability at 31 December 2023 has been calculated at 25 per cent based on the rate at which the deferred tax is expected to unwind in the future using rates enacted at the balance sheet date.

The deferred taxation liability of £2.7 million (2022: £5.6 million) in relation to employee benefits is in respect of the net surplus for the defined benefit obligations of £11.0 million (2022: £22.4 million) (Note 21) calculated at 25 per cent (2022: 25 per cent).

Deferred taxation liabilities represent sums that might become payable as tax in future years as a result of transactions that have occurred in the current year. The explanation as to why such liabilities may arise is included in the notes to the tax reconciliation (Note 7).

The deferred tax liabilities disclosed in the year ended 31 December 2023 include the deferred tax relating to the Group’s pension scheme assets. Deferred tax assets on capital losses and overseas trading losses have not been recognised due to uncertainty around the future use of the losses.

The deferred tax balances on short-term timing differences are expected to reverse within one to three years.

Based on the current investment programme of the Group and assuming that current rates of capital allowances on fixed asset expenditure continue into the future, there is little prospect of any significant part of the deferred taxation liability of the Company becoming payable over the next three years. It is not realistic to make any projection after a three-year period.
 

Marshalls NV was disposed of on 14 April 2023. Is a company incorporated in, and tax resident in, Belgium which manufactures and sells landscape products. Marshalls NV did not pay corporation tax in 2023 because the company has utilised brought forward losses in the period.

Marshalls Landscape Products (North America) is a company incorporated in, and tax resident in, the USA which sells landscape products. The US Company has paid a minimal amount of tax in 2023.

Marshalls Xiamen Import Export Company Limited is a company incorporated in China and is tax resident in China. The company is not a trading company, it provides quality assurance services to the Marshalls Mono Limited and expenses incurred are borne by the UK

* Actual number of employees each month averaged over 12 months
**Marshalls NV was disposed of on 14th April 2023

Marshalls PLC Tax Strategy

Date of publication Summer 2023

The Marshalls Group is concerned with being a good corporate citizen which includes paying the right amount of tax at the right time. Marshalls follows relevant legislation and case law and applies professional care and judgement in approaching tax compliance. Marshalls pays a significant amount of tax to local and national government.

This strategy applies to Marshalls plc and all UK entities in its group for the year ended 31 December 2023. This document complies with paragraph 16 of the Finance Act 2016 which requires large businesses to publish their tax strategies.

Accountability for all UK tax lies with Group Tax and Group Payroll who report to the Board through the CFO.  The group actively seeks to identify, evaluate and monitor risks that may arise throughout the business.  Marshalls maintains a tax risk register and a program of monitoring processes and controls to minimise tax risk.

Marshalls Tax Policy is reviewed annually by the Board, additionally the Board are notified of tax compliance and issues on a regular basis. External advisors are likely to be engaged where there is uncertainty surrounding an area or transaction.

Marshalls’ Tax Policy sets out the Group’s commitment to being fully tax compliant.  

Marshalls’ Tax Strategy is aligned to the commercial reality of the business and the structure of the Group reflects this.  Marshalls will make use of available tax reliefs without using aggressive tax avoidance schemes.

The Marshalls Group considers it important to apply all applicable tax laws, rules and regulations in meeting Group tax compliance.  The Group’s aim therefore is to minimise tax risk via compliance and control.

Marshalls seeks to maintain a good working relationship with HMRC based on openness, co-operation and good compliance, in line with HMRC’s Framework for Co-operative Compliance.  Discussions with HMRC take place on a real time basis to minimise tax risk where possible and to reduce uncertainty within the business.  Marshalls will engage in open and honest discussion where there are disagreements on the interpretation of tax law or treatment, with a view to resolving any dispute where possible.