Group Tax Strategy
As part of the group’s UK compliance and governance policy, the UK tax strategy paper is set out below.
The group has a number of UK trades and businesses across a number of different activities, ranging from horse racing to property ownership.
The group views itself as a private equity investor in businesses and uses leverage, both internal and external, to fund acquisitions and restructurings. This is primarily a commercial concern with the debts being, in the most part, secured creditors over the assets of the various companies providing a simple route of cash extraction and value protection.
As a private group, the concerns about annual financial metrics and KPIs are less important as the longer term investment strategy program looks for capital / business value growth rather than making annual profits and making dividend returns to the shareholders as is paramount in quoted companies. Thus whilst the level of debt and interest may seem significant, they are commensurate with the long-term expectations of profits & gains and reflect the financial and business model of the overall group factoring in the additional ‘intangible’ value from prime assets.
This tax strategy paper covers the following areas:
- Attitude to Tax Planning
- Level of Risk in relation to tax planning that the Group is prepared to accept
- Management of Tax Risks
- Working with HMRC
Attitude to Tax Planning
The UK companies do not ordinarily undertake tax planning in respect of corporate tax, income tax, value added tax or stamp duty in the ordinary course of their businesses, although the Group will seek to take the benefit of Government tax incentives such as Capital Allowances and R&D relief where appropriate
Where practical, we will look to liaise with HMRC on potential transactions with UK tax implications either at regular CRM meetings or via correspondence to ensure a ‘no surprises’ review of the UK companies’ tax returns.
The UK companies do not undertake planning that requires DOTAS Scheme Reference Numbers to be disclosed on tax returns.
Level of Risk in relation to tax planning that the Group is prepared to accept
The level of risk that the UK companies’ are prepared to accept in relation to tax planning is based upon a minimum of the ‘more likely than not’ opinion of professional advisers should any planning be undertaken based on the commercial facts and circumstances.
Management of Tax Risks and Governance
The central UK tax and finance team work with the UK operational teams in the different streams to understand the businesses, keep appraised of key issues, opportunities and transactions so that the tax position can be considered on an on-going basis.
- Having established the communication to know the key areas in the UK businesses, the group looks to achieve management of any tax risks by utilising the guidelines set out below:
- Having strong technical positions for operations and transactions undertaken
- Establishing clear explanations of the positions taken
- Creating documentation of the facts and the transactions
- Maintaining good relationships with professional advisers to allow them to provide tax advice on uncertain areas
- Aiming to file accurate returns on time
The group considers taking advice from its professional advisers on significant one off transactions and where changes in legislation may impact the tax position.
For any transaction where planning opportunities may be available, the commercial facts must match the planning opportunity. In such circumstances, the opportunity is considered and the tax risk evaluated prior to any planning being undertaken.
In addition to the factual position in reviewing the risk, the following will be considered:
- the potential impact on corporate reputation;
- the fiduciary and legal duties of the directors;
- the financial cost / benefit of the planning, including interest and penalties;
- the implications on the relationship with HMRC.
Working with HMRC
The group has communication with and works with HMRC with the aim to ensure smooth and timely annual compliance. The aim is to provide an open approach in the provision of information and future plans and intentions at meetings with HMRC.
Any tax authority audits or enquiries are handled by the central tax team who provide the necessary responses to HMRC with advice from external advisers if required.