INTRODUCTION
In compliance with UK tax law the Specialist Machine Developments (SMD) Ltd consolidated Group, “SMD Group”, is publishing its tax strategy for the year ending 31 December 2017. The SMD Group, whose shareholding is owned in full by the CRRC Group incorporated in China, sets out its tax affairs and risks which includes the following entities:
– Specialist Machine Developments (SMD) Ltd;
– Soil Machine Dynamics Ltd;
– SMD Offshore Support Ltd; and
– SMD Robotics Ltd.
The SMD Group is committed to:
– Following all applicable laws and regulations relating to its tax activities.
– Maintaining an open and honest relationship with the tax authorities based on collaboration and integrity.
– Applying diligence and care in the management of processes and procedures by which all tax related activities are undertaken, and ensuring that tax governance is appropriate.
– Using incentives and reliefs to minimise the tax cost of conducting business while ensuring that these reliefs are not used for purposes which are knowingly contradictory to the intent of legislation.
TAX RISK MANAGEMENT
The Group’s tax affairs are complex and cross many areas of the business, where tax governance and risk management is provided by the Group’s Finance function. The internal structure is set up to ensure:
– The Board of directors understand the importance of tax compliance and how it is achieved.
– There is constant dialogue between the Board and Finance regarding the way the business manages its tax risk.
– The business portrays a positive view towards tax compliance and the importance of meeting our obligations.
Eliminating tax risk entirely is impossible, therefore the Group’s attitude towards the level of control required over the processes designed to reduce tax risk is driven by the likelihood of occurrence and scale of impact of each risk. The tax risks are then assessed on a case by case basis, allowing the Group to make informed decisions on how each risk should be managed. External advice may be sought in the decision making process where there is uncertainty.
TAX PLANNING AND ATTITUDE TOWARDS RISK
The Group’s tax planning aims to support the commercial needs of the business by ensuring that the companies’ affairs are carried out in both a tax efficient and ethical manner, whilst remaining compliant with all relevant laws. It is policy not to undertake aggressive tax planning for which the sole purpose would be to obtain a tax advantage. Furthermore, the Finance team are involved in the commercial decision making process which ensures that a clear understanding of tax, from both a financial impact and compliance perspective, is considered when decisions are made by the business.
The Finance team have strong relationships with external advisors whom, on having a good understanding of the business through quarterly meetings, provide relevant advice on future changes to tax laws. Professional advice is also sought on a transactional basis, with the depth of such advice being driven by the assessment of each risk presented.
APPROACH TOWARDS DEALINGS WITH HMRC
The Group’s communication with HMRC is focused around timely tax compliance, for example meeting relevant filing and payment deadlines for taxes the Group pays and in doing so, the Group is committed to the principles of openness and transparency in its approach. We also seek to have similar relationships with other Tax Authorities within the jurisdictions in which we operate.
In its corporation tax and R&D tax credit claims the Group employs the services of professional tax advisors to act as agents, and often liaise with HMRC on the Group’s behalf. This is seen by the Board as a way to ensure the Group gets the most out of its relationship with HMRC, thus reducing tax risk.
