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IAA, Inc.’s Strategy in Relation to UK Taxation Overview

IAA, Inc. (“IAA”, “we”, or “the company”), an entity listed on the New York Stock Exchange as IAA, is the ultimate parent of the UK companies that form the (“IAA UK Group”) which include the following legal entities: KAR International Holdings Limited; KAR UK Holdings Limited; HBC Vehicle Services Limited; 1st Interactive Design Limited; Gilbert Mitchell Holdings Limited; and Gilbert Mitchell Limited. IAA is headquartered in Westchester, Illinois, U.S.A.

IAA is a leading global marketplace connecting vehicle buyers and sellers. Leveraging leading-edge technology and focusing on innovation, IAA’s unique multichannel platform processes more than 2.5 million vehicles annually. IAA provides a broad range of services to insurers, fleet and rental companies, rebuilders, charity organizations and financing companies that reduce the cycle time of selling a vehicle with a focus on delivering the highest economic returns. Buyers have access to the industry’s most-innovative vehicle evaluation and bidding tools, enhancing the overall purchasing experience.

Introduction

This document sets out the IAA UK Group’s policy and approach to conducting its tax affairs and dealing with tax risk. Our tax strategy is to maintain the highest standards of tax compliance by managing our tax affairs in full compliance with UK tax laws and tax laws of all other jurisdictions in which we operate. Our tax strategy applies to all IAA UK Group companies.

This document is published pursuant to the requirements set out in Sch 19 Finance Act 2016 in respect of the year ended 31 December 2019. The strategy applies to KAR International Holdings Limited, KAR UK Holdings Limited, HBC Vehicle Services Limited, 1st Interactive Design Limited, Gilbert Mitchell Holdings Limited, and Gilbert Mitchell Limited.

The document will be periodically reviewed and any amendments will be approved by IAA’s Chief Financial Officer and Controller.

The Director of Global Tax (“Director of Tax”) ensures that:

• The strategy is adopted and followed consistently across the IAA UK Group.
• There is alignment of the strategy with the global business’s overall approach to corporate governance and risk management.
• The IAA UK Group meets its tax obligations, by the relevant deadlines under the tax laws and regulations of the UK and all other jurisdictions in which we operate.

Tax policy

The IAA UK Group is committed to conducting its tax affairs as follows:

• In compliance with all relevant tax laws and regulations in the UK and all other jurisdictions in which we operate.
• Ensuring the tax strategy is at all times consistent with the IAA UK Group’s overall strategy, its approach to risk, and the IAA UK Group’s core values.
• Applying diligence in the management of all risks associated with tax matters.
• Engaging with tax authorities in an open and honest manner that reflects integrity and respect.

Risk management and governance

The ultimate responsibility for the IAA UK Group’s tax affairs rests with the Chief Financial Officer (CFO). Oversight is provided by the Board of Directors. The CFO and Controller delegate the day-to-day management of tax function to the Director of Tax. The Director of Tax is supported by a team comprised of appropriately qualified and experienced personnel whose knowledge is up-to-date through continuing professional development. Tax Advice is obtained from external professional advisors when it is judged to be required, for instance, where tax guidance is unclear or where alternative interpretations or approaches might result in different tax outcomes.

Management of Tax Risks

As a multinational group, we are exposed to a variety of risks, both internally and externally, that could affect our business. The more significant risks we consider from a tax perspective include complexity and jurisdictional risk, legislative and regulatory changes, tax compliance and reporting risks, and business operational risks. As a result, IAA UK Group does not have a prescriptive policy on levels of acceptable tax risk.

When reviewing the tax risks associated with a specific decision or action, the IAA UK Group ensures that the following are considered:

• Legal and fiduciary duties of directors and employees.
• Related internal policies and procedures.
• Maintenance of the IAA UK Group’s corporate reputation.

Attitude to Tax Planning

• Applicable incentives and reliefs are used to reduce the tax costs of conducting business while ensuring reliefs are not used for purposes which are knowingly contradictory to the intent of the tax legislation.
• In cases where tax guidance is unclear, or where alternative interpretations or approaches might result in different tax outcomes, the IAA UK Group will use its best judgement to determine the appropriate course of action. This will usually involve seeking advice from external professional advisers where needed and applicable.
• The IAA UK Group will not enter into transactions that have a main purpose of gaining a tax advantage or intentionally make interpretations of tax law that are opposed to the original intentions of the legislation.
• Any tax planning undertaken will have commercial and economic substance in line with the IAA UK Group’s commercial activities.

Relationship with HMRC

We aim to have a constructive, professional and transparent relationship with HMRC, and in particular, the IAA UK Group commits to:

• Conducting its communications with HMRC in a courteous and timely manner, and with openness and honesty.
• Make fair, accurate and timely disclosure in correspondence and returns, and respond to queries and information requests in a timely fashion.
• Work together to resolve issues if disagreements were to arise.

31 December 2019

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