INTRODUCTION

In accordance with paragraph 17(4), Schedule 19, Finance Act 2016, Sinclair Motor Holdings Limited and its subsidiaries (Sinclair Group) consider the publication of the information below as complying with the duty to publish the Group’s tax strategy as required by paragraph 16(2), Schedule 19, Finance Act 2016.

This tax strategy applies to all companies within the Sinclair Group, a list of which are shown in Appendix 1. All companies are part of the Group headed by Sinclair Motor Holdings Limited and are all registered and based in the UK.

OVERALL TAX STRATEGY

As a responsible taxpayer, Sinclair Group is committed to establishing, maintaining and monitoring an appropriate tax strategy. The overall objective of Sinclair Group’s tax strategy is to pay the correct amount of tax at the right time and to maintain an open and robust relationship with HMRC.

PAYING THE CORRECT AMOUNT OF TAX

The correct amount of tax is that calculated as payable according to the legislation in force at the time. Correct does not mean paying the maximum amount of tax due but that which results from a careful evaluation of the particular facts and legislation. Sinclair Group adheres to the principles set out in HMRC’s Framework for Cooperative Compliance (the "Framework"), the overall objective of which is also to ensure payment of tax at the right time.

Maximising retained profit in the business is achieved by minimising taxation. This is not achieved by adopting abusive tax planning but by ensuring systems are in place to enable tax to be calculated correctly (i.e. not overpaying tax or not underpaying tax and incurring penalties and interest) and to that extent, by maximising tax reliefs available e.g. capital allowances, R&D tax credits.

WORKING WITH HMRC

The Group seeks to maintain an open, honest and positive working relationship with HMRC and is committed to prompt disclosure and transparency in all tax matters with them. The Group strives to comply with its tax filing, reporting and payment obligations in a way that balances against the commercial requirements of the business but always within the allowed time scales.

Regular review meetings are held between the Group’s Senior Accounting Officer (SAO) and HMRC’s Customer Relationship Manager (CRM) and their teams to discuss open issues and to discuss events occurring within the business. To this end, HMRC is aware of any one-off transactions before the tax returns containing those transactions are submitted.

Any disagreements with HMRC would be in respect of differing interpretations of how the law should be applied. These issues would be professionally addresses to maintain the mutual respect in our dealings with each other. Sinclair Group has no on-going disputes with HMRC.

RISK MANAGEMENT

CONTROLLING AND MANAGING RISKS

Sinclair Group has well established and documented processes and controls which consider potential tax compliance risks and the controls in place to mitigate these risks. These processes form the basis on which the Senior Accounting Officer (SAO) certificate is signed on an annual basis.

Sinclair Group has adopted a bottom-up approach to identifying any significant risk in the business. Broadly this encompasses processes and controls at site and Group level. How items are accounted for, the review processes in place to establish accounting integrity, the potential risks that could arise and how those risks are mitigated, are all documented, reviewed from time to time and audited.

All business units are subject to monthly accounts reviews at site and Group level; each business receives a visit from the Group Accountant on a 3 month cycle. This forms the "factual" basis from which the tax consequences are calculated. Those tax consequences are calculated both from these embedded processes and the application of judgment to technical areas by the SAO.

COMPLIANCE AND REPORTING

Established processes and controls are in place to ensure that tax returns are submitted on time and without subsequent correction. All entries in the tax returns are evidenced with supporting documentation. All tax payment calculations are documented and reviewed using well established review procedures.

Relationships between the SAO and the rest of the business ensure that calculations are based on the most up to date relevant information. The SAO is a member of the Board which enables tax to be involved in the decision making in all areas of the business.

External third party software is licensed for use by our external tax advisors for use in preparing certain tax returns. As well as providing an additional layer of integrity for HMRC, it ensures that any changes to legislation that impact tax calculations are correctly reflected in the tax returns as appropriate.

KEY ROLES AND THEIR RESPONSIBILITY

The Management Accountants employed within Sinclair Group’s Finance function are the key to the establishment and adherence to the Tax Strategy. Sinclair Group has always placed significant focus on its accountants and testament to this is that many members of the Finance team rank within some of the longest serving employees in the group. All Finance staff are either professionally qualified in Accountancy or by experience. Their wealth of experience and knowledge within the business is key to the success of the Tax Strategy. The membership of Professional Accountancy bodies ensures that Finance employees are up to date with legislative changes which impact the tax affairs of the business.

Internal The SAO works within Finance to ensure that tax payments are built into cash flow forecasts and that tax calculations and returns are based on accurate financial information. The SAO also works with other in-house departments (payroll, property, operational) to ensure that information required is provided on a timely basis. As a Board member the SAO is regularly updated by any matters concerning tax.

External It is recognised that from time to time the Group does not have the requisite experience or knowledge in-house and in such circumstances professional advice is taken from reputable external advisors. For example, the Group uses external professional services for the preparation of Corporation tax returns.

Outside specialists have also been used where it was considered that in so doing, the integrity of the tax returns and calculations would be maximised. For example, the use of external experts to identify appropriate VAT treatment of Dealer contributions.

ATTITUDE TO TAX PLANNING

The Group recognises its responsibility to pay the correct amount of UK Tax. This is balanced against ensuring the commercial success of the business and we may utilise tax incentives or opportunities for obtaining tax efficiencies where these:

• Are not considered to carry significant risks to either our reputation or to damaging our relationships with HMRC
• Are aligned with the intended policy objectives of the governments which introduced the incentive, and
• Are aligned with our business or operational objectives External advice may be sought where the complexities or uncertainties are considered a risk and to assist the Group in complying with its tax strategy.

External advice may be sought where the complexities or uncertainties are considered a risk and to assist the Group in complying with its tax strategy.

The Group does not tolerate tax evasion, nor does it tolerate the facilitation of tax evasion by any person acting on its behalf.

LEVEL OF ACCEPTABLE RISK

Sinclair Group does not undertake artificial arrangements which would be regarded as abusive and high risk. However, tax risk will always arise when there is dispute between Sinclair Group and HMRC over the technical treatment of a particular issue. Sinclair Group assesses the risk of continuing to dispute any matters by weighing the facts and technical position against the impact on reputation, costs of litigation and any potential penalties and the desire for certainty versus uncertainty.

Apart from any areas of potential technical subjectivity, the controls and procedures in place and their constant monitoring ensure that tax returns are prepared in a low risk environment and give the senior accounting officer sufficient comfort when certifying those controls and procedures. HMRC’s recent (March 2018) Risk Assessment of Sinclair Group was ‘Low Risk’.

Appendix 1

Members of the Sinclair Motor Group:

• Sinclair Motor Holdings Limited
• Sinclair Garages (Newport) Limited
• Sinclair Garages (Port Talbot) limited
• Sinclair Garages Limited
• Sinclair Garages (Bridgend) Limited
• Sinclair Garages (Cardiff) Limited
• Sinclair Garages (Swansea) Limited
• Swansea TPS Limited