Taxation strategy: Contents
1. Introduction ……………………………………………………………………………..3
2. Governance of tax………………………………………………………………………..5
3. Organisation, processes and communication ……………………………………………6
4. The control activities …………………………………………………………………….9
5. Tax planning parameters………………………………………………………………..11
6. Strategy review schedule………………………………………………………………..12
e-mail protocol and contact sheet of key personnel
1.1 Overview of the Group
The Spicers-OfficeTeam Group in the UK consists of:
- OfficeTeam Ltd a private company, which through its network of warehouses sell office supplies and other business products to businesses throughout the UK.
- Spicers Ltd a private company, which through its network of warehouses is a wholesaler of office suppliers and related business products to resellers throughout the UK and to its subsidiary in Ireland.
The Spicers-OfficeTeam Group Limited has the following active UK incorporated tax resident subsidiary companies:
Spicers (UK) Ltd*
Oyez Professional Services Ltd*
BECAP Spicers (UK) Ltd
Whitegrove Group Ltd
OfficeTeam Logistics Ltd
OyezStraker Office Supplies Ltd
OfficeTeam Trustees Ltd
Office Zone Business Solutions Ltd
The Spicers-OfficeTeam Group Ltd
Project Oliver Holdco Ltd
Project Oliver Topco Ltd
OfficeTeam Group Ltd
OyezStraker Group Ltd
Waterlow Business Supplies Ltd*
PADS Printing & Stationery
Stat Plus Ltd
Stat Plus Group Ltd
Buro Business Supplies Ltd
OfficeTeam Sales Ltd
* The primary trading companies in the Group
The purpose of the Tax Strategy is to communicate the policy for the management of tax within The Spicers-OfficeTeam Group Ltd and its subsidiary undertakings (“the Group”). It is important to ensure that consistent and effective tax standards are maintained across the Group as tax (both direct and indirect) can have a significant cash and profit and loss impact on the Group and therefore on many of the Group’s business activities.
Tax includes Corporation Tax, PAYE, employee taxes, VAT, Insurance Premium Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Petroleum Revenue Tax, Customs & Excise Duties (including Air Passenger Duty) and withholding taxes. This strategy will be updated regularly to reflect any changes to this scope.
1.4 Review and communication
This Tax Strategy will be owned by the Board of The Spicers-OfficeTeam Group Ltd (‘the Board’). It will be reviewed annually by the Group Financial Controller, Samantha Keogh and Group Tax Accountant, Lisa Eades for approval by the Chief Financial Officer, Andrew Mobbs. Any proposed changes will be discussed and approved by the Board.
1.5 Risk management
Effective risk management is paramount for the Group and underpins its business strategy. The Group’s appetite for risk is a carefully calibrated part of the business model aligned to the strategic and corporate objectives.
The Group’s on-going tax risk approach is based on principles of reasonable care and materiality. Each tax risk is measured based on a balance of impact of that risk and its likelihood and recorded in the tax risk register. Impact may consider financial and non-financial factors.
The aim is not to avoid or eliminate risk entirely, but to manage closely the Group’s exposure to risk.
Control and assurance activities are mapped against each risk identified to provide the relevant committees with details of how the risk is managed.
1.6 Tax objectives
- The Finance department is responsible for all taxes within the Group. Its objective in relation to tax is to support the Group’s strategy whilst ensuring compliance with relevant laws and filing obligations.
- Tax performance will be measured in the following ways:
- A clearly understood, communicated and supported strategy;
- Paying the appropriate amount of tax at the appropriate time;
- Forecasting and planning tax cash payments accurately;
- Ensuring the most effective tax elections, claims and options are considered, with respect to materiality, to manage the tax paid by the Group;
- Ensuring that any transactions undertaken to grow the Group are effected tax efficiently;
- Implementing and maintaining controls and procedures relating to all taxes ensuring that the correct amount of tax is paid, inspections or reviews by HM Revenue & Customs (“HMRC”) and other regulators do not lead to the imposition of any fines or penalties and enabling the Senior Accounting Officer to provide the annual certification required under Schedule 46 Finance Act 2009; and,
- Act in a proactive fashion in relation to the Group’s tax affairs;
- To maintain the Group’s reputation as a fair contributor to the UK economy which applies tax rules in good faith and in the spirit they are intended.
2. Governance of tax
2.1 Policy oversight
The Chief Financial Officer has responsibility for tax at Board level and communicates with and advises the Board on the tax affairs and risks of the Group, to ensure:
- The proper control and management of tax risk;
- The tax position is planned in line with the Group’s strategic objectives; and,
- The tax charge is correctly stated in the statutory accounts and tax returns.
2.2 Policy principles
The Board has established that the following principles will form the basis of the management philosophy and the tax policy of the Group. These principles set out one shared vision within the Group of tax compliance and one view of performance in respect of this:
Good Governance – The Group works hard to ensure that we are able to demonstrate our compliance with the highest standards in corporate governance;
Risk and Internal Control – The Group has implemented a system of internal controls designed to respond effectively to significant risks to achieving the Group’s business objectives. The system is designed to manage rather than eliminate the risk of failing to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Group applies these same principles to its tax affairs and accounting;
Change Management – Ensuring that there is a change management policy (see below) adopted to enable the Group to handle the risks identified due to developments in legislation or changes to the business operations or processes.
Transaction Planning – The Group will strive to ensure that transactions are structured such that any tax relief available to the business is realised in line with materiality considerations, efficiencies realised, and the reduction of, and recovery of, the taxes is maximised where opportunities with a credible technical standing are available, and are permitted within the approved parameters of the tax planning framework and tax planning criteria set out in this policy and to support the commercial activity of the group.
3. HMRC Relationship
The Group maintains an open and honest relationship in its dealing with HMRC and will seek to work in ‘partnership’ with HMRC in relation to its tax dealings:
- In the event of any inadvertent error(s) arising, full disclosure, where required by law will be made to HMRC;
- The Group will disclose any relevant planning it undertakes to HMRC in line with the legal disclosure requirements and criteria set out by HMRC;
- The e-mail protocol has been agreed with HMRC to define communication routes; and
- The Group will continue to meet and cooperate with HMRC to facilitate a mutually beneficial relationship.
4. Organisation, processes and communication
4.1 Roles and responsibilities
This Tax Strategy clearly defines the roles and responsibilities to enable the effective operation of processes and delivery of the Group’s tax strategy.
The key areas of responsibility and processes are set out below:
4.2 The Board
The Board is ultimately responsible for the Tax Governance policy. The Board has delegated this responsibility to the Chief Financial Officer who will report up to the Board as required. The Board is responsible for ensuring there is an appropriate framework for the implementation of the policy and oversight of the identification and management of tax risk. The Board maintains responsibility for implementing new controls where material tax risks are identified.
The Chief Financial Officer has ownership of the Group’s tax operations and oversight of tax risk, with the detailed analysis and preparation of the tax records covered by the Financial Controller.
A number of tax sensitive processes are performed within the finance and human resources departments of the business and each relevant stakeholder is responsible and accountable for meeting its tax obligations, controls and policies as issued by the Board.
Performance of the Group Finance team, the Financial Controller and these other stakeholders is reportable to the Chief Financial Officer who in turn reports up to the Board.
The Chief Financial Officer’s responsibilities also include:
- Regular communication with the Board regarding management of material tax risks and opportunities;
- Reviewing any significant transactions; (e.g. acquisitions, disposals, financing arrangements);
- Approving external advisor appointments;
- Monitoring adherence to the Tax Strategy;
- Approval of tax disclosures for the Group’s financial statements;
- Approval of tax returns; and,
- Ensuring accounting systems and controls report accurate and timely information for tax reporting purposes, thereby enabling the Senior Accounting Officer to provide the certification required by Schedule 46 Finance Act 2009.
In addition, as part of its on-going review of corporate governance, the Board will continue to evaluate the Group’s performance to ensure it maintains good corporate governance.
4.3 Information and communication
(Operational Responsibility: Group Financial Controller & Chief Financial Officer)
Internal communication and escalation procedures are established within the business and understood by staff.
All staff report tax sensitive queries to the Group Financial Controller who will raise material tax related risks to the Chief Financial Officer where required.
The Chief Financial Officer and the Group Financial Controller will determine whether to escalate any queries to the Board, HMRC, the appointed tax advisors or other specialist advisor.
4.4 Resource management
(Operational Responsibility: Group Financial Controller & Chief Financial Officer)
The Chief Financial Officer and the Group Financial Controller who are responsible for tax within the Group are, and will always be, chartered accountants.
The competence of the Group and divisional finance teams is ensured via tax training in accordance with the nature of their roles.
All staff involved in the tax accounting process have access to the tax relevant process and will have been internally trained for the process they are involved with.
All staff involved in the tax accounting processes are trained in the tax related aspects of their role. All training includes a full walkthrough of an individual’s particular role, obligations and escalation procedures.
4.5 Change management
(Operational Responsibility: Group Financial Controller & Chief Financial Officer)
In respect of legislative changes and emerging best practice, members of the Group and divisional finance teams receive regular updates from their tax advisors via email alerts and are regularly invited to attend update meetings and web casts. Staff also have access to free web based resources provided by HMRC and the ‘big four’ accountancy firms. If further advice is required staff can access specialists at the appointed advisers, through its relationships.
External advisers are particularly used to assist with operational change, exceptional items, and large and complex transactions and areas of the business.
The use of external advice is assessed and agreed with the Group Financial Controller and the Chief Financial Officer and is focused on providing both technical and commercially relevant advice and guidance to the Group.
The Group will liaise with HMRC to determine and agree where possible the correct treatment of key items, and its compliance requirements, wherever it is uncertain of the prevailing rules to apply.
Control activities and any other relevant documentation are appropriately updated to reflect changes in the business or tax law.
Any tax sensitive systems changes are agreed, monitored, tested and approved by the relevant finance team. Such changes are identified via a finance business partnering arrangement on significant projects.
The Group will take a prudent approach to uncertainty, but if relevant and appropriate to the historic position of any tax sensitive areas, provision will be made within the accounts to accommodate these.
5. The control activities
5.1 Risk register
The business has put in place a tax specific risk register designed to identify and monitor tax risk within the Group. The tax risk register is designed to:
- Identify tax risks in a consistent and formal manner;
- Assess tax risks using standardised definitions;
- Formalise the tax risk management framework;
- Facilitate testing of mitigating controls i.e. monitoring;
- Provide an escalation framework to the main risk register; and,
- Give visibility for high level Board reporting to facilitate appropriate oversight over the tax risk identification and monitoring framework.
The areas of tax risk managed by the business will be subject to on-going review by the Group Financial Controller and Group Tax Accountant and further documentation will be developed where deemed necessary.
5.2 Key controls
Key controls to manage the risk of incorrect tax accounting will be developed and the fulfilment of these will be documented in the various tax returns workings papers and associated tax sensitive ‘high risk’ business processes.
The related process and control documentation will comprise of a number of distinct parts as described below:
- A dataflow map to show the data hand offs within the process, complete with identified risk points;
- For each risk point, the specific risks will be highlighted together with the corresponding control objective;
- For each control objective, the control and monitoring activities will be detailed;
- In addition to supporting the sustainability of the control framework, any process improvements, whether by simplification, standardisation or automation of the process will be highlighted.
This process and control documentation will be subject to a program of on-going improvement as and when relevant changes are made to the underlying processes or when new risks are identified.
5.3 Monitoring activities
The completion of the above key controls in relation to the tax accounting will be documented in the returns working papers and associated tax sensitive ‘high risk’ business processes.
The Finance department will self-audit the Group’s performance in line with the strategic principles set out above, and will be sensitive to the commercial operations in place at that time. These reviews will also cover the maintenance and access to records and the tax sensitive use of its financial systems and the appropriateness of these.
Self-audit planning will focus on the high risk business processes as priority based on the tax risk registers. Plans are agreed with the CFO on a six monthly basis.
The business will be independently audited annually, and tax accounting, where deemed required, will be audited in accordance with this process.
A plan of action will be agreed with the Chief Financial Officer and the Group Financial Controller as applicable to act upon recommendations made within these reviews/audits within a timeframe which is appropriate to the Group’s risk management objectives and resource allocations.
5.4 Cash flow
Detailed cash flow forecasts are produced at weekly looking forwards 13 weeks and biannually looking forward 6 months. If and when any additional lending facilities are required these require approval from The Board and Investors.
6. Approach to Tax Planning
6.1 Tax planning
The proactive and timely communication of business transactions is key to allowing effective tax management to be undertaken through liaison with external advisors. Effective liaison at the planning stage of a transaction will ensure that tax risks and opportunities inherent in transactions are managed effectively.
6.1.1 Controls over tax planning
All papers put forward to the Board that contain comments on tax must be supported by an appropriate level of tax analysis. The Chief Financial Officer will be responsible for ensuring sufficient tax analysis has been undertaken in advance of the papers being submitted to the Board.
All transactions falling within the above principles and/or specifically mentioned must have Board level approval before they can proceed.
6.1.2 Assessment of tax planning
The Chief Financial Officer will understand tax risks and opportunities on future transactions and current tax planning opportunities. The general principles defined in section 2.2 will be adhered to for all tax planning. In addition, these principles are supplemented by the following parameters defined by the Board and should be used in the assessment of tax planning. The Group will use these parameters to determine whether the tax risks presented by the adoption of any particular tax planning opportunity are acceptable or not.
- Commercial purpose: All transactions must have a commercial purpose.
- Reputation impact: The planning should have limited impact if details were in the public domain.
- Impact on cash flow: Cash flow should be positively impacted if planning is successful, with the potential upside benefit outweighing any downside cost.
- Impact on financial accounts: Profitability (post tax return) should be positively impacted if planning is successful, with the potential upside benefit outweighing the downside cost
- Strength of tax advisors opinion: Appropriate external advice, including Tax Counsel opinions where relevant, will be obtained as necessary.
7. Strategy review schedule
This strategy has been formalised for approval by The Board on March 2017.
The Chief Financial Officer and Group Financial Controller will review the strategy on an annual basis and recommend changes to The Board as necessary on each anniversary following its approval.