The Medical Defence Union tax strategy - year ending 31 December 2023

Introduction

The Medical Defence Union (MDU) is the leading medical defence organisation in the UK. It is owned by and run for the benefit of its members, including doctors, dentists and other healthcare professionals. The benefits of membership of the MDU are all discretionary and subject to the memorandum and articles of association, provided on the company website at themdu.com/about-mdu/memorandum-and-articles-of-association.

Any financial surplus generated from the operating activities of the Medical Defence Union is reinvested in activities and services for the benefit of our members.

The parent company of the Group, the Medical Defence Union Limited, has mutual trading status. This status is derived from the 'mutuality concept', eg, an organisation cannot trade with itself; the MDU's members are also its owners. Consequently, any financial surplus generated within the mutual, relating to services provided to our members, is not subject to corporation tax. Other activities undertaken within the MDU group, are subject to corporation tax in the normal way.

The approach of the MDU to its tax affairs is discussed in more detail as follows:

(i). Approach of the group to risk management and governance arrangements in relation to UK taxation

Throughout the organisation, there is strong corporate governance. The board is ultimately responsible for the management of tax risk and governance, with day-to-day responsibility being held by the chief financial officer and the finance function. The tax control environment within the organisation is regularly reviewed and periodic internal audits are undertaken, with any recommendations communicated at board level and actively monitored through to implementation. In addition, an organisational risk register is regularly maintained and reviewed, identifying and taking external professional advice on tax risks as they develop, and, where possible, implementing controls to mitigate these.

(ii). Attitude of the group towards tax planning (so far as affecting UK taxation)

In accordance with the guidance on tax planning as articulated by the Confederation of British Industry (CBI) and its published Statement of Tax Principles, the MDU only engages in tax planning on commercial principles, as follows:

• the MDU only engages in reasonable tax planning aligned to the interests of its members and its economic activity
• the MDU does not enter into any such planning in circumstances where it expects the planning to lead to an abusive result
• the MDU responds to tax incentives and exemptions as appropriate
• the MDU seeks to interpret relevant tax laws in a reasonable way and takes external professional advice on these in appropriate cases.

(iii).Level of risk in relation to UK taxation that the group is prepared to accept

• The MDU's corporate governance practices are designed to strengthen the board of directors' management oversight and to serve the long-term interests of members, employees, and other stakeholders.
• Tax governance is aligned to wider corporate governance and risk appetite set by the board.
• The chief financial officer has accountability over our approach to tax, which includes the identification, prioritisation, and monitoring of tax risk. The chief financial officer is also responsible for ensuring that tax risk policies and procedures are maintained and communicated.
• In managing tax risk across the business, the MDU aligns tax risk to the group's internal risk management and internal controls system. Specifically, tax risks are assessed as part of the group's corporate governance guidelines and escalated to the audit and risk committee (and ultimately the board) as appropriate. External professional advice is sought in appropriate cases.

(iv). Approach of the group towards its dealings with HMRC

The MDU is committed to the principles of openness and transparency in our approach to our dealings with tax authorities. All dealings with tax authorities and other relevant bodies will be conducted in a collaborative manner and will seek to achieve agreement and certainty on a real time basis wherever practicable. We aim to work positively, pro-actively and transparently with tax authorities, to achieve early agreement on disputed issues wherever possible.

The MDU seeks to ensure that we protect our members' best interests by taking professional and legal advice where required in relation to the content of our tax filings and to our interaction with, and obligations to, tax authorities and governments.

We are also committed to ensuring we comply with all relevant legal disclosure requirements as required by governments and tax authorities.

This statement of the MDU's tax strategy was approved by the board of management at its meeting in November 2023 for publication in accordance with Paragraph 16(2) Schedule 19 Finance Act 2016. This reflects the required review of the MDU's tax strategy for the year ended 31 December 2023.