LIONSGATE UK TAX STRATEGY

Updated: 8th November 2017

LIONSGATE UK TAX STRATEGY

In compliance with section 161 and section 19(2) of schedule 19 Finance Act 2016, each of Lions Gate International (UK) Limited and Lions Gate UK Limited (together, the “Company”, and with their subsidiaries and affiliates, “Lionsgate” or the “Group”) is publishing its tax strategy for the year ending 31 March 2018.

Our business has a strong focus on corporate responsibility, timely and accurate tax administration, and, reporting payments according to applicable law.

Our overall tax strategy is to:

  • Meet all legal requirements and to make all appropriate tax returns and tax payments;
  • Seek to utilise available tax reliefs and incentives where available in a manner which is consistent withthe government’s policy objectives;
  • Consider the tax impact in major or complex business decisions, for example corporate acquisitionsand disposals;
  • Operate in an environment where we consider tax in the context of our reputation and brand;
  • Comply with appropriate tax risk processes, and ensure the board of directors of the Company, whichmay establish policies for the UK companies in the Group (the “Board”), has oversight of thiscompliance; and
  • Comply with all applicable tax/finance laws.Tax Risk Management and Governance ArrangementsThe Board is responsible for the tax strategy of the UK companies in the Group (the “UK Group”). Day to day responsibility for the UK Group is delegated to the UK Finance Director who works with the Group’s Chief Tax Officer (“CTO”) to manage tax risk for the UK Group through the Group tax department and through the operational accounting functions of the UK business.The Board reviews and approves the UK Group’s tax strategy annually. In addition the Group’s Audit Committee monitors the Group’s tax risks and receives quarterly reports on the principal tax risks and tax law changes in the UK and worldwide from the CTO.The Group tax department identifies and manages UK tax risks using its knowledge of the UK Group’s operations and UK tax legislation. They do this by:
  • Regular communication with finance and legal staff within the UK business to keep informed of any significant business changes;
  • Regular communication with Group treasury and legal departments about intra- group finance and shareholdings or business arrangements that potentially could affect the UK business and Group;
  • Regular communication with professional tax advisors in the UK and other countries to keep informed of tax developments and impact on the Group;
  • Involvement in all corporate acquisitions and investments including review of (a) financial and tax due diligence reports into the target’s business and (b) draft agreements; and
  • Monitoring proposed changes in UK and other country tax legislation to identify its potential impact for the UK group.

In accordance with UK rules, the Group nominates a Senior Accounting Officer (“SAO”) for each of the companies in the UK Group. The SAO ensures that processes of tax compliance are carried out correctly and liaises with the Group tax department about tax risks and controls to mitigate those risks.

Tax Planning

We believe it is important to plan our business operations so that we can comply with UK and other country tax obligations, and to consider the tax consequences of transactions before carrying them out. Lionsgate is committed to acting with integrity in all business dealings and relationships, and has a zero tolerance approach to tax evasion.

Where there are alternative methods to achieve the same commercial result, we will consider all relevant factors including taxation before deciding on the best method.

The Group tax department is consulted on the tax consequences of major potential transactions including acquisitions and disposals. It advises on the preferred routes to minimise potential tax risks and costs.

The UK Group focuses on ensuring compliance with indirect, direct, and payroll taxes to minimise any risk of penalties arising from failure to timely and accurately file and remit such taxes. The UK Group provides relevant information to the Group tax department who, along with the UK Finance Director, manages the corporate tax compliance.

The Group tax department consults external advisors regarding the tax implications of a potential transaction or other aspects of the business when necessary. Typically this occurs where the Group does not have sufficient in-house expertise, the transaction is of a new type to the Group, or is of significant scale, or where recent or pending tax law is involved. Tax planning advisors are also consulted with respect to non-transactional items e.g. effects of legislative changes.

The strategy for the UK Group is approved by the Board of Lions Gate International (UK) Limited (“Lionsgate UK”), being the main UK trading entity of the UK Group.

Level of Tax Risk

In accordance with the strategy approved by the Board of Lionsgate UK, the Group takes a measured approach to tax risk as it does to other risks in the business.

We recognise there is always some level of risk on taxation due to:

  • The complexity of, and frequent changes in, tax laws and business transactions;
  • The possibility of disagreement over the interpretation of tax laws; and
  • The variety and volume of different taxes that affect the Group’s activities.Approach towards HMRCSelf-assessment for most taxes means that the Group calculates and pays all UK taxes itself based on its application of UK legislation. As the Group is a large business, HMRC has appointed a Customer Relationship Manager (CRM) to coordinate HMRC’s risk assessment and managing HMRC’s relationship with Lionsgate.

We strive to be fully transparent when engaging with our CRM and other HMRC tax personnel. The Group is in regular contact with the CRM. We update HMRC on a regular basis about developments in our UK business, and raise material tax issues prospectively when necessary to ensure compliance with UK law.

Lions Gate seeks clearances from HMRC when appropriate regarding the UK tax treatment of changes in our business and applicable law. We timely respond to HMRC questions and provide complete information requested in a collaborative, cooperative manner.

This statement has been approved by the Board of Directors of Lions Gate International (UK) Limited, being the main UK trading entity of the UK Group, and will be reviewed annually.

Dated: September 27, 2017