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Hayter Holdings Limited Our Tax Strategy

Hayter Holdings Limited (“Company”) is a wholly owned subsidiary of The Toro Company (“Toro”). Toro is a company based in the United States of America and designs, manufactures, and markets professional turf maintenance equipment and services, turf irrigation systems, landscaping equipment and lighting products, snow and ice management products, agricultural micro-irrigation systems, rental and specialty construction equipment, and residential yard and snow thrower products.

The principal activity of the Company is that of a holding company to Hayter Limited (“Hayter”) and Toro Principal Manufacturing Limited (“TPML”). The principal activity of Hayter is the design, manufacture, marketing, and distribution of grass-cutting machinery. The principal activity of TPML is the contract-manufacture of turf maintenance equipment, turf irrigation systems, and snow maintenance products. Collectively, the Company, Hayter, and TPML will be termed as the “UK Group” in this Tax Strategy

In the operation of their business, UK Group members strive to be world-class companies, responsible corporate citizens, and good employers.

The UK Group conducts business activities that generate the reporting and payment of a variety of taxes, including income taxes, employer and employee taxes, as well as indirect taxes such as excise duties and VAT. The taxes the UK Group reports and pays form a significant part of the UK Group's economic contribution to the United Kingdom.

Toro's Code of Conduct is adhered to by all companies under its ownership, including UK Group members. Therefore, before any action (including any action having tax implications) is undertaken by UK Group members or any of their employees, three questions are to be asked, as denoted in the Code of Conduct:

Consistent with the Company Code of Conduct, the UK Group follows the following Tax Strategy, which is being published here pursuant to Paragraph 19(2) , Schedule 19, Finance Act 2016:

  1. Tax Planning

    The UK Group engages in tax planning that supports its business and reflects commercial and economic activity. It does not engage in artificial arrangements.

    The UK Group adheres to relevant tax law and seeks to minimise the risk of uncertainty or disputes.

    UK Group members conduct transactions with other Toro group companies on an arm's-length basis and in accordance with current OECD principals.

    Tax incentives and exemptions are sometimes implemented by governments and fiscal authorities in order to support investment, employment, and economic development. Where such incentives and exemptions exist and when relevant to Toro's business, Toro-group companies (including the UK Group) may seek to apply them, with the intent to implement in the manner intended by the governments and fiscal authorities.

  2. Relationships With Taxing Authorities

    Toro and its subsidiaries, including the UK Group, are committed to maintaining an open, transparent and collaborative approach in our dealings with taxing authorities.

    For example, the UK Group supports the principal behind multilateral moves towards greater transparency that increase understanding of tax systems and build public trust. Toro has a team dedicated establishing systems to meet the transparency requirements of Base Erosion and Profit Shifting (“BEPS”) reporting originating from the BEPS project, which was initiated by Organisation for Economic Cooperation and Development (“OECD”). Toro is working with all of its subsidiaries in establishing BEPS reporting, including members of the UK Group.

    The UK Group monitors its tax reporting on an on-going basis. If incorrect reporting is identified, amended reporting or voluntary disclosure would be made to the taxing authorities. The UK Group is committed to remitting the right amount of tax in the UK, as well as interest and penalties that may become due as a result of incorrect reporting.

    Regarding audits by or assessments from the taxing authorities, the UK Group strives to work collaboratively wherever possible with fiscal authorities to resolve disputes and to achieve early agreement and certainty.

  3. Tax Risk Management

    Toro and its subsidiaries, including the UK Group, have a low tolerance to tax risk. Transactions undertaken by the UK Group are motivated by business reasons, not tax planning. If there are tax implications to such transactions, those implications are thoroughly vetted.

    Toro teams with all of its subsidiaries, including UK Group members, to identify, assess, and manage tax risks and account for them appropriately. Risk management measures, including controls over compliance systems, are maintained and monitored for their effectiveness.

    Toro has a regulatory risk team that continually monitors world-wide Toro group risk, including tax. It periodically reports to the Toro board of directors on how regulatory risks are managed and monitored and how improvements are being made. The Toro board of directors provides governance and oversight of such regulatory risks.

  4. Governance

    The Toro group Global Tax Director owns and implements the approach to tax, which is adopted by all Toro affiliates, including the UK Group. The approach is continually monitored by the Toro board audit committee. The Toro group Global Tax Director is also responsible for ensuring that policies and procedures that support the approach are in place, maintained and used consistently around the world by all Toro subsidiaries, including the Group.

Further Information

The Tax Strategy is reviewed and update annually. It was last approved for the fiscal year ending October 31, 2017 by the Toro Managing Director - Tax & Treasury and the Toro Global Tax Director.