Bodycote plc – Annual report – 31 December 2017
- Contingent liabilities
The international tax environment has received increased attention and seen rapid change over recent years, both at a US and European level, and by international bodies such as the Organisation for Economic Cooperation and Development (OECD). Against this backdrop, Bodycote has been monitoring developments and continues to engage transparently with the tax authorities in the countries where we operate. In October 2017, the European Commission opened a state aid investigation into the Group Financing Exemption in the UK controlled foreign company rules. The Group Financing Exemption was introduced in legislation by the British government in 2013. In common with other UK-based international companies whose arrangements are in line with current UK CFC legislation, Bodycote may be affected by the outcome of this investigation. If the preliminary findings of the European Commission’s investigation into the UK legislation are upheld, we calculate the maximum potential liability to be approximately £15m. Based on a current assessment, Bodycote believes that no provision is required in respect of this matter.