Northrop Grumman Corporation United Kingdom Tax Strategy

Introduction and Scope

Northrop Grumman provides innovative systems, products and solutions to government and commercial customers worldwide, offering a broad portfolio of capabilities and technologies for applications from undersea to outer space and into cyberspace. In the UK, Northrop Grumman has a well-established presence and operates from facilities at 12 locations providing a range of capabilities including avionics, command and control communications, air traffic control, unmanned systems, electronic warfare, marine navigation systems, C4I civil and security, C4I defence, cyber security, aircraft whole life support, IT systems and software development.

Northrop Grumman sets out below its group tax strategy for all UK companies within the Northrop Grumman global group of companies in accordance with Paragraph 16(2), Schedule 19, Finance Act 2016. This strategy applies from the date of its publication until it is superseded.

Governance

The Vice President, Tax oversees tax strategy, tax compliance and tax risk management, reports directly to the Chief Financial Officer and annually reviews the status of significant tax matters with the Audit Committee of the Northrop Grumman Board of Directors. The Vice President, Tax also leads the Corporate Tax team, which is responsible for the day-to-day management of the tax affairs of the company, including the tax affairs outside of the US, and specifically in the UK. The Corporate Tax team is staffed with appropriately qualified and experienced individuals.

Attitude Towards Tax Planning

The company engages in tax planning as permitted by law in support of commercial aims. The company does make use of applicable tax incentives, reliefs and exemptions in line with legislation to support the business. The company may, in certain instances, use external consultants to assist in the completion and submission of tax returns. We may also seek external tax advice where appropriate, for example, when we are considering significant transactions or reorganizations, or with Transfer Pricing documentation and benchmarking.

Risk Management and Level of Risk

The company operates a group wide risk management framework, with comprehensive policies and procedures, which encompasses the overall internal control framework as required by the Sarbanes-Oxley Act, and includes the management of tax risks. The company regularly reviews and monitors the controls in place and will make changes where required. The company provides appropriate training to both the individuals in the Corporate Tax team and the wider business where applicable. In addition, all employees of the company are required to comply with the company’s Standards of Business Conduct (the "Code") and certify annually their understanding of and compliance with the Code. The Code requires all employees to comply with applicable laws and regulations and to ensure the integrity of their actions and decisions, as well as those who act on the company’s behalf.

Working with HMRC

We believe that a transparent relationship with HM Revenue and Customs (HMRC) that is constructive and built on mutual respect with open lines of communication is vital to the success of our business. We provide full disclosures in the submissions of tax returns and in all correspondence with HMRC.