HUACI Group and Subsidiary Companies Group Tax Strategy

 

The Board of HUACI Group is responsible for ensuring that the tax obligations of the Group are understood, complied with and managed appropriately. Fulfilling its tax obligations and maintaining a transparent and cooperative relationship with HMRC is integral to the Group’s Tax Strategy.

1. Introduction

1.1 Background

HUACI Group is a privately owned, family run group based in the South of England. It is the holding company for HUACI Group which is a business in the sales and distribution sector. HUACI Group is the Official CHINA Manufacturing company for HUACI Group, Product Tabletop, Bakeware and other household Home and Kitchen brands, in addition the company also has a manufacturing facility producing its own Enliven range and other branded products.  HUACI Offers a range of added value services including co-packing, design, merchandising and category management.

This document sets out the strategic tax objectives of HUACI Group and its subsidiaries (“the Group”).

It is not designed to be an operational manual with detailed instructions of the underlying processes and controls. Further commentary around the systems and risk management framework of the Group is contained within the group’s compliance systems.

1.2 Approval

The Groups Chief Financial Officer is responsible for leading the Tax Strategy. The strategy is approved by the Board of Directors.

The document will be periodically reviewed, and any amendments will be approved by the Board of Directors. It is effective for the year ended 30 June 2023.

1.3 Audience

This document is primarily of relevance to the Finance Team together with the Board of Directors who are responsible for tax across the organisation.

The policy is available to all employees and can be found on the company intranet and website.

1.4 Purpose

The purpose of the Tax Strategy is to communicate the policy for the management of tax within HUACI Group 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.

1.5 Scope

Most of the group’s operations are in the world, with a subsidiary operation in Ireland.

The following taxes are in scope

  • All direct taxes including Pay As You Earn (PAYE) and Corporation Tax (CT)
  • All indirect taxes including VAT and Customers and Excise Duty

The strategy applies, in respect of all companies in the group, to:

  • Tax compliance of all in scope taxes
  • Tax financial reporting

2. Our Strategy

2.1 Summary

The vision of the business is to provide customers with market leading fast moving consumer goods, by being the trusted distribution and manufacturing partner.

The tax strategy is designed to support this vision.

HUACI Group is committed to paying the right amount of tax required under the laws and regulations of UK tax legislation and practice. It takes a conservative approach to tax planning, and does not pursue aggressive tax planning arrangements. The group uses third party advisors to provide advice and guidance necessary to assess the tax risks and ensure its compliance with applicable laws, rules, regulations, and reporting and disclosure requirements.

2.2 Group Tax Policy

 

HUACI Group is committed to conduct its tax affairs consistent with the following objectives, to:

 

  1. Comply with all relevant laws, rules, regulations, and reporting and disclosure requirements, wherever we operate
  2. Ensure the tax strategy is at all times consistent with the Group’s overall strategy, its approach to risk, and the Group Core Values
  3. Apply professional diligence and care in the management of all risks associated with tax matters, and ensure governance and assurance procedures are appropriate
  4. Foster constructive, professional and transparent relationships with tax authorities, based on the concepts of integrity, collaboration and mutual trust
  5. DCS will use incentives and reliefs to minimise the tax costs of conducting its business activities, but will not use them for purposes which are knowingly contradictory to the intent of the legislation.

2.3 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 which is 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 management with details of how the risk is managed.

2.4 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 governance and compliance with all the 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;
    • Act in a proactive fashion in relation to the Group’s tax affairs and to maintain the Group’s reputation as a fair contributor to the CHINA economy which applies tax rules in good faith and in the spirit they are intended.

3. The control activities

3.1 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 Groups Finance Director and supporting team, further documentation will be developed where deemed necessary.

Attitude towards tax planning and level of risk the group is prepared to accept

The group will maintain a low-risk rating with HMRC.

The Group takes a conservative approach to tax planning and does not pursue aggressive tax planning arrangements. Where alternative routes exist to achieve the same commercial result the most tax efficient approach in compliance with all relevant laws shall be considered

The Group seeks to be efficient in its tax affairs but ensures that any planning is based on sound commercial principles.

The Group will take advantage of the reliefs and incentives that exist but show respect for the intention of the law, as well as the letter, at all times.

The Group will use incentives and reliefs to minimise the tax costs of conducting its business activities, but will only undertake arrangements which they reasonably believe do not contradict the spirit of the law. For example the Group will not undertake transactions for tax which are inconsistent with the underlying economic consequences or undertake marketed avoidance. The company will not establish business in tax havens.

Approach to dealing with HMRC

The Group will avoid unnecessary time-consuming disputes wherever possible.

The Group are committed to working in a collaborative, transparent and proactive way with HMRC at all times.  The Group adopts the principles of openness and transparency in its approach to dealing with HMRC and believes in engaging in full, open and early dialogue with HMRC to discuss the Group’s tax affairs.  The Directors responsible will meet with the Groups Customs Relationship Manager to discuss relevant taxes and seek advice in cases of uncertainty of doubt. The Group is committed to making fair, accurate and timely disclosure in correspondence and returns, and respond to queries raised by HMRC in a timely manner with the aim to resolve any issues in real-time where possible or to work together to resolve issues quickly and efficiently, with certainty wherever possible.

4. Governance

The Board of Directors acknowledges that is has responsibility for fully complying with the tax laws in all relevant jurisdictions.

The Board of Directors is responsible for establishing the overall governance and approving the tax strategy. However, management authority for the day-to-day operation of the business is delegated to the Chief Financial Officer. Tax is considered as part of the overall governance framework.

To ensure that the Tax Strategy is delivered; diligent professional care and judgement will be employed to assess tax risks to arrive at well-reasoned conclusions on how the risks should be managed.

4.1 Structure and organisation

The organisation of the management of tax across the group can be described as follows:

Finance Team

The Finance team employs various risk management processes and systems to provide assurance that the requirements of the Group’s tax strategy are met.

Use of Professional advisors

Matters where the Chief Financial Officer considers there is insufficient skill or experience internally are referred to external professional advisors who have suitable knowledge of the company, and hold suitable accounting and tax qualifications, as well as relevant experience.

The Board of Directors review the Groups tax strategies and risks as well as internal controls and systems employed by the Group on an ongoing basis.