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TAX STRATEGY OF LANDS’ END EUROPE LIMITED
Lands’ End Inc. (“the Group”) is a US listed multinational leader in the multi-channel retailing of casual clothing, accessories and footwear, as well as home products. With operations in several countries across the globe, the Group generated global sales of approximately $1.34bn during the 2016 fiscal year.
Lands’ End Europe Limited (“Lands’ End UK”) is the group’s only UK company, which operates mainly in the UK and continental Europe. It is required by Part 2 of Schedule 19 of the UK Finance Act 2016 to publish a document setting out its approach to conducting UK tax affairs and dealing with UK tax risks for the year ended 2 February 2018. This documented shall be updated, as appropriate, in subsequent accounting periods.
The Group values honesty, integrity and adherence to the highest ethical standards. This applies to all aspects of its operations, including its UK taxation affairs. As part of this commitment, the Group has a series of policies and procedures in place. This includes a publicly accessible Code of Conduct, which applies to all officers and employees of the Group in all jurisdictions in which the Group operates, including the UK. All individuals are expected to abide by both the letter and spirit of this Code of Conduct to ensure that the Group maintains its legal and ethical business practices.
A link to the Group’s Code of Conduct can be found here.
Approach to Risk Management and Governance Arrangements
The Group aims to fully comply with all applicable UK tax laws and regulations. As part of this aim, it manages and minimises exposure to UK tax risks by maintaining an effective control environment. A continual risk assessment is undertaken, in conjunction with external advisors as appropriate, to understand the potential UK tax risks that the Group is subject to. Relevant procedures and controls are put in place to mitigate such risks.
The Group recognises the complexities that UK tax law can bring, and takes external advice on matters where a third-party opinion is required to supplement the Group’s decision-making process. This extends to areas of tax where there is a degree of uncertainty, as well as specialist areas where it is feasible to outsource the work. Training, communication and a clear understanding by staff of their responsibilities in relation to UK taxation ensures that a sufficient and appropriate level of knowledge is maintained by employees in relation to their respective roles.
As part of a US listed group, the application of such processes and internal controls is reinforced through compliance by Lands’ End UK with relevant provisions of the Sarbanes-Oxley Act together with regular reviews through both internal and external audits.
The Group’s UK tax affairs are primarily the responsibility of members of the UK Finance Department, led by the Finance Director and Financial Controller who are both responsible for the UK and Europe. There is also oversight from the Group’s US Director of Taxes, who provides strategic direction in relation to UK taxation matters where appropriate.
Attitude towards Tax Planning
Lands’ End applies the Group’s Code of Conduct to tax planning matters. Transactions or structures that could be seen to be contrived, without business purpose or with the main purpose of reducing a UK tax liability are not permitted.
The Group only undertakes transactions which have a sound legal and commercial basis. UK tax law is considered as part of the commercial decision-making process to ensure that the tax implications are understood, tax risk minimised and relevant tax rules fully complied with. As part of this, external professional advice is sought where necessary.
The Group also works within the Base Erosion and Profit Shifting framework set out by the OECD. For example, Lands’ End UK maintains Transfer Pricing policies which are based on the latest OECD guidance on the arm’s length principle and the Group implements and fulfils Country by Country Reporting requirements.
Lands’ End UK aims to conduct its tax affairs in an efficient manner. For example, UK tax incentives and reliefs (such as capital allowances) are utilised as permitted by UK law to minimise the tax cost of conducting business. Lands’ End does not, however, adopt aggressive tax positions. Reliefs are not used for purposes which are knowingly contradictory to the intent of the legislation. If there is uncertainty regarding the application of specific tax law, clarification is sought from professional advisors.
Approach towards Dealings with HM Revenue & Customs
Lands’ End UK expects all communications with HM Revenue & Customs (“HMRC”) to be made in a timely manner and with full co-operation.
The Group is dedicated to maintaining a strong relationship with HMRC, and acts in a transparent and collaborative manner in all its dealings with HMRC. In conjunction with its ethical values and principles set out in its Code of Conduct, it engages with HMRC in a manner of honesty and respect.
As noted above, in areas where the Group is unsure of the correct treatment under UK tax law, third party clarification is sought from external advisors. Where uncertainty remains, advance clearance may also be sought from HMRC. For example, this may include a situation where there is uncertainty regarding the application of specific tax legislation to a transaction.
Acceptable Level of UK Taxation Risk
Lands’ End UK maintains a conservative approach to UK tax risk. It seeks to comply fully with all UK tax laws and regulations and to act in a way which adheres to the principles set out in the Group’s Code of Conduct, as outlined above.
Approval of Tax Risk Strategy
This document has been approved by the Group’s Director of Tax, Mike Pezzella, on 30th January 2018.
LANDS' END EUROPE LIMITED SLAVERY & HUMAN TRAFFICKING STATEMENT FOR FINANCIAL YEAR ENDING FEBRUARY 2, 2018
The United Kingdom Modern Slavery Act of 2015 requires certain businesses to provide disclosures concerning their efforts to address the issue of slavery and human trafficking within their own businesses and supply chains.
Lands' End Europe Limited ("Lands' End UK") operates as a retailer in the United Kingdom. This statement is to provide you with details of our efforts to address the issue of slave labour and human trafficking in our business and in our supply chain.
Lands' End UK maintains employment policies and a Code of Conduct for employees establishing ethical business practices. More specifically, our UK employee hiring practices include confirming eligibility to work in the UK and a verification process to review and maintain copies of these documents. If an employment agency is used in the hiring process, we require the agency to follow similar practices and maintain a proper modern slavery policy. In addition to these practices, we have whistleblower resources to raise ethics concerns including issues related to modern slavery.
Regarding our supply chain, our parent company, Lands' End, Inc. (a U.S. corporation) has a long-standing labour and social compliance program, (the "Global Compliance Program") applicable to each of its operating subsidiaries, including Lands' End UK, to ensure that direct suppliers for Lands' End, Inc. and its operating subsidiaries comply with all applicable local laws, as well as Lands' End, Inc.'s internal standards related to child labour, wages and benefits, working hours, harassment/abuse, discrimination, health and safety, factory security, freedom of association, environmental compliance, and forced/slave labour, human trafficking.
The following is a summary of specific efforts of the Global Compliance Program for this financial year:
- Global Supplier Requirements. All direct merchandise suppliers agree to comply with all applicable laws and with all Lands' End, Inc.'s standards and policies including the Global Compliance Program Requirements (”Requirements”).
- Global Supplier Inspections. Factories that produce Lands' End merchandise are assessed regularly by approved 3rd party firms on our behalf. There were over 200 inspections in approximately 30 countries in the fiscal year ending February 2, 2018. All Inspectors are trained on our program, our expectations, and the specific local language and laws in each country. Specifically, the inspectors are trained to review and assess high risk areas associated with slave labour and human trafficking, including but not limited to: 1) the presence of migrant workers, 2) the availability of a formal communication channel in the factory for workers to raise human rights issues, 3) the number of intermediaries between the factory and the migrant worker, 4) the use of labour recruiters and the process, 5) the recruitment costs passed on to migrant workers, 6) loans held by workers, 7) the terms and conditions of employment, and 8) the handling of visas and passports. The inspections are conducted on site, and involve interviews with workers and management, a review of pertinent factory records, and a physical inspection of the factory and dormitory facilities. Depending on the outcome of the inspection, a detailed corrective action plan may be required and implemented. Regular follow-up visits are also conducted to ensure efforts are made to correct any violations. If a supplier is found to be actively engaged in violation of this policy, further disciplinary actions may be taken, up to and including immediate termination and reporting to law enforcement.
- Global Supplier Training. During the vendor onboarding process suppliers are advised of the Lands' End Global Compliance Program Requirements, Vendor Code of Conduct, and additional resources available including the Global Compliance Guidebook. All inspectors are trained to provide guidance during the inspection process as issues arise. For more challenging issues, vendor and factory leaders can access specific compliance leaders located in certain countries to consult on process improvement methods.
- Internal Training. Training on all program Requirements is provided by our lead inspection firm to all 3rd party inspection firms who conduct social compliance inspections on our behalf. In addition, Lands' End designated production and quality assurance resources who visit factories as part of their job responsibilities are trained on the indicators of slave labour and human trafficking, and are required to report any potential issues for further investigation by the global compliance team.
For more information regarding Lands’ End’s efforts to address the issue of slave labour and human trafficking in our supply chain, you may email firstname.lastname@example.org
This statement was approved by the Board of Directors of Lands' End Europe Limited.
Signed: Peter L. Gray,
Director Lands' End Europe Limited