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The Chaucer Group (Chaucer) is a leading specialty insurance group, which mainly writes insurance and reinsurance business through the Lloyd’s market. Chaucer is ultimately owned by China Reinsurance (Group) Corporation (China Re). China Re also directly owns two UK companies, China Re UK Limited (CRUK) and China Re Underwriting Agency Limited (CRUA). References to Chaucer below also cover CRUK and CRUA.
China Re is a leading reinsurer in China and one of the top 10 reinsurance companies in the world. China Re is the only state-owned reinsurance group in China and it maintains excellent security ratings from A.M. Best and Standard & Poor’s. China Re is listed on the Hong Kong stock exchange.
Chaucer aims to achieve full compliance with its tax obligations. This includes the maintenance of good working relationships with HMRC and other tax authorities, and the safeguarding of our reputation as a responsible taxpayer.
Chaucer operates in a highly regulated industry. Risk management is an essential and embedded part of the activities undertaken to achieve the group’s strategic objectives. Chaucer has developed a comprehensive risk management framework, with each legal entity Board of Directors being ultimately responsible for risk management, including tax risk management.
Oversight of the risk management system and systems of internal control is delegated to the appropriate legal entity Risk and Capital Committee (Board Committee) and Operations Committee (Board sub-Committee). Tax risks, along with all other risks facing the business, are subject to Chaucer’s three lines of defence model, which provides multiple levels of oversight:
Chaucer’s main tax risks relate to compliance and reporting, transactional risk and reputational risk with the tax authorities and other relevant stakeholders in the different countries where Chaucer operates. In order to manage these tax risks, Chaucer has appropriate internal controls and procedures in place. For example, tax calculations and payments are subject to separate internal review and Chaucer retains evidence of the review process. The group-wide internal controls ultimately provide management with the visibility of the review, risk assessment and sign-off of all material tax transactions. The internal review system supports the Senior Accounting Officer sign-off on appropriate tax accounting arrangements. Chaucer employs external advisers for specialist or complex matters.
Chaucer’s Head of Tax has regular meetings with the Group CFO and the Finance Leadership Team. Chaucer’s Head of Tax also raises tax issues with the Investment and Finance Committee (Board sub-Committee). The Group CFO escalates key tax issues to the appropriate legal entity Board.
Chaucer has a low risk appetite towards tax risk, in accordance with the direction from each legal entity Board and senior management. Chaucer undertakes efficient tax planning, for example to avoid double taxation in different jurisdictions and to maintain a tax efficient legal entity structure.
Chaucer does not engage in aggressive tax planning or tax planning that lacks commercial purpose. Chaucer’s senior management team considers the tax consequence of significant transactions, with oversight from the appropriate legal entity Board. If particular tax planning or business transaction is complex, requires specialist knowledge, or there is uncertainty regarding the potential tax implications, Chaucer will obtain advice from suitably qualified external advisers.
Equally important in Chaucer’s tax planning process is the interaction with Chinese taxation because of China Re’s ownership of Chaucer. As a listed company on the Hong Kong stock exchange, China Re maintains a prudent tax risk appetite and attitude towards tax planning similar to Chaucer. China Re aims to create long-term economic value for shareholders and this includes tax efficiency in its own affairs, as well as those of Chaucer.
In accordance with its code of conduct, Chaucer believes in having a collaborative, open and honest relationship with HMRC. Chaucer does this by making HMRC aware of key business issues and tax developments (past, current and future) through face-to-face meetings and through separate discussions where required, for example if it is unclear how the legislation would apply in a particular scenario. Chaucer discloses relevant information on key issues and transactions when submitting tax returns to HMRC.
In the event of discovering an inadvertent error or mistake in a submitted tax return, Chaucer will provide full and voluntary disclosure to HMRC as soon as practical, including the reason(s) for the error. Chaucer will then co-operate fully with any follow-up queries, ensure prompt settlement of any outstanding tax liability and put process improvements in place to mitigate the tax risk going forward. Chaucer aims to deal with queries from HMRC on a timely basis and provide full information to explain how the business operates and manages tax risks.
China Re International Company Limited regards the publication of the above information as complying with its duty under Paragraph 19, Schedule 19 of the Finance Act 2016 for the 2020 financial year on behalf of its subsidiary companies. China Re UK Limited and China Re Underwriting Agency Limited regard the publication of the above information as complying with their duty under Paragraph 22, Schedule 19 of the Finance Act 2016 for the 2020 financial year.