Group Tax Strategy and Code of Conduct

Risk management and governance

Radius Limited and its subsidiaries (“the Group”) are subject to the following principal taxes in the UK:

1. Corporation tax;

2. Capital gains tax;

3. Value added tax;

4. Employer’s national insurance contributions; and

5. Stamp taxes.

The Group is also responsible for withholding income tax, national insurance contributions and other deductions from certain payments, principally 7. employee remuneration.

Similar taxes are in place in the overseas territories in which the Group operates.

The Group is exposed to the following tax risks:

1. Tax returns being inaccurate or incomplete;

2. Under or over collection of tax payments or refunds; and

3. Tax authority fines or sanctions being imposed as a result of the above.

The Group board is responsible for risk management and manages its tax risks within a group wide risk management and governance framework.

The Group’s finance function and Chief Financial Officer (CFO) have been tasked by the board with ensuring that the Group’s tax strategy and code of conduct are understood and adhered to by employees and professional advisers in all countries in which the Group operates.  The CFO is responsible for highlighting tax risks to the board and recommending actions.

The CFO is also the designated Senior Accounting Officer (SAO) with responsibility for providing assurance to the UK tax authorities (HMRC) that the UK companies in the Group have adequate tax accounting and control arrangements in place.

As a large multinational organisation the Group acknowledges its responsibility to comply with the 15 actions developed by the OECD/G20 Base Erosion and Profit Shifting project.  These are designed to equip governments with domestic and international instruments to address tax avoidance, ensuring that profits are taxed where economic activities generating the profits are performed and where value is created.

Tax strategy

The Group’s tax strategy is based around three key priorities:

1. A commitment to integrity in compliance and reporting;

2. The need to control and manage risks to the business; and

3. A desire to enhance shareholder value.

The commercial needs of the Group are paramount and all tax planning is undertaken in this context.  All transactions must therefore have a business purpose or commercial rationale.

Due consideration will always be given to the Group’s reputation, brand, corporate and social responsibilities when considering tax initiatives, as well as the applicable legal and fiduciary duties of directors and employees of the Group.

The Group aims for certainty on tax positions it adopts but where tax law is unclear (or subject to interpretation) written advice or confirmation will be sought as appropriate to ensure that the Group’s position would, more likely than not, be settled in its favour.   Where the tax treatment of an item is so uncertain and/or unquantifiable that the above confirmation cannot be obtained, filing positions should be subject to robust risk assessment and supported by full disclosure.

Compliance with all relevant legal disclosure and approval requirements will be adopted and all information will be clearly presented to the tax authorities or other relevant bodies, as appropriate. Openness, honesty and transparency will be paramount in all dealings with the tax authorities and other relevant bodies.

Tax code of conduct

The Group’s tax strategy is underpinned by a code of conduct which applies to all employees and professional advisers and governs their key responsibilities, professional conduct and approach to working relationships with third parties.  In developing the code of conduct we recognise our obligation to pay the amount of tax legally due in every territory we operate in, in accordance with rules set by governments and the tax authorities.

Specifically, all employees and professional advisers involved in tax related affairs are expected to:

• Observe all applicable laws, rules, regulations and disclosure requirements;
• Apply diligent professional care and judgment to arrive at well-reasoned conclusions;
• Ensure all decisions are taken at an appropriate level and supported with documentation that evidences the facts, conclusions and risks involved; and
• Be compliant with all anti-bribery legislation.

As stated in the tax strategy, we are particularly committed to promote collaborative professional working with tax authorities to build open, transparent and trusted relationships.  It is therefore particularly important we:

• Promptly provide full, accurate and helpful answers to queries and provide information without the need for tax authorities to invoke formal powers to require document production;
• Where disagreements over tax arise, proactively work with tax authorities to seek to resolve all issues by agreement (where possible);
• Engage in open early dialogue with tax authorities to discuss tax planning, strategy, risks and significant transactions and fully disclose any significant uncertainty in relation to tax matters;
• Seek to resolve issues in real-time and before returns are filed where possible; and
• Make fair, accurate and timely disclosure in tax returns, reports and documents submitted to tax authorities.

Tax planning and risk assessment procedures

The Group’s appetite for risk is low and we do not engage in aggressive tax planning.  Tax is not a key driver in our business planning or commercial decision-making activities.

The Group will avoid structuring transactions in a way which would produce tax results that are inconsistent with the underlying economic consequences unless specific legislation exists which is designed to give that result.

In order to ensure adherence with the above policy, the Group’s senior finance team (and, if appropriate, external advisers) must be involved in the planning, implementation and documentation for all:

• business or share acquisitions and disposals;
• changes in corporate structure;
• cross border financing or trading arrangements;
• significant business transactions; and
• development of new processes affecting tax compliance.

Where new cross border intra-group trading arrangements are being set up, the finance team must be involved in advance of any arrangements being put in place so that appropriate inter-company pricing can be designed and documented.

The Group will always seek external advice in situations where it has insufficient knowledge or internal expertise or as a second opinion where there is uncertainty over the application of tax law.  In certain circumstances HMRC or other tax authorities will be approached as appropriate to seek direct clarity.

As stated in the tax code of conduct the Group must comply with all tax regulations and disclosure requirements in all countries in which it operates.  There are several levels of review in place internally to achieve compliance and third party advisers are utilised to assist where appropriate.  Where compliance processes have been outsourced to a third party they must equally ensure this principle is adhered to.  Specifically:

• the Group should submit all returns and payments by their due dates in line with local tax law;
• all material positions taken in the tax returns must be supportable in terms of documentation and legal interpretation. It is strongly recommended that clear documentation of facts and circumstances be recorded at the time of any transaction;
• the finance function should monitor changes in relevant tax law and practice and undertake regular training in order to assess any consequences for the Group, with the minimum aim of mitigating any adverse impact; and
• audits and tax authority enquiries should in most circumstances be handled by the finance team, supported by external advisers. Such enquiries will be handled in accordance with the code of conduct set out above.

Dealings with HMRC and other tax authorities

The Group’s objective is to have a transparent and professional working relationship with HMRC and other tax authorities in countries where it operates.  We endeavour to take a proactive approach in the event that errors or omissions are identified, disclosing these to the relevant tax authorities and taking remedial action (including putting in place controls to prevent recurrence) as quickly as practicable. Regular contact is made with our Customer Relationship Manager at HMRC and we also schedule  an annual “Business Risk Review” meeting.