In accordance with paragraph 17(4), schedule 19, Finance Act 2016. Johnsons Cars Ltd and its subsidiaries consider the publication of the information below as complying with the duty to publish a tax strategy as required by paragraph 16(2), Schedule 19, Finance Act 2016.
Johnsons Cars Ltd is a privately owned business, established in 1999. From our first day of trading we have always taken the principle of paying the correct amount of tax and duties payable at the right time as fundamental to the way we trade. We have established the way we operate the business to meet this obligation. We do at all times maintain an open, professional and robust relationship with HMRC which they test from time to time. Like all strategies we have a number of core elements centred on risk attitude, governance, tax planning, professional advice and relationships. This strategy deals with these.
Do we pay the correct amount of Tax?
We believe we do pay the correct amount of tax. Our principle taxes are:-
First Registration fees and road fund licences
Stamp duty and land tax
All the above taxes are paid according to the current legislation in place at the time. We apply and adhere to the legislation in place based upon the facts following the principles set out in HMRC’s “Framework for Cooperative Compliance”. However Johnsons Cars is a professional business and will structure transactions in a tax efficient way, but not in a way to create artificial arrangements to reduce the tax payable, but to follow the spirit of legislation where doubt exists or there are gaps in legislation.
Risk – Identify risks in the business and mitigate those risks to reduce to a minimum
Johnsons Cars has a low risk approach to tax compliance risk and will mitigate risk through training, monitoring, controlling and correcting errors at every occasion. We do confirm this annually through the Senior Accounting Officer certificate issued annually.
The above listed taxes can be ranked with regard to risk with VAT being by far the highest risk area in terms of value and complexity. VAT for the motor trade is a complex area and subject to many different rules, regulations and conventions going back decades and evolving annually. The tax take from VAT on high ticket items makes it the main focus of HMRC in our industry with the greatest rewards if we do not have a robust technical knowledge, training, monitoring and management basis. We do at every stage test we are paying or reclaiming the correct VAT and manage the risk accordingly. This will be by regular internal audit tests, verification of treatment on unusual events and these are tested by infrequent HMRC visits. In situations of doubt the accounting functions will flag up to the Tax Department for guidance.
Payroll taxes is the second most risky area. This risk centres on benefits in kind, employee expenses, minimum wage payments, pension deductions etc. Again we have a low threshold to risk here and through a high degree of centralisation, HMRC approved programs and oversight we believe the risk is reduced substantially.
Corporate Taxes is the next in line of risk. We have a very simple corporate tax structure, maintain a high level of knowledge and control over the corporate tax construction, validation and submission. Reducing the management of risk substantially.
The remaining main tax area of road fund licences, first registration fees, business rates and SDLT are very structured and considered very low risk areas due to their nature and calculation methods. Again management of the risk is very much centralised giving rise to a consistent and correct approach to calculation and payment.
Governance – Integrity of compliance and reporting
The tax department establishes the processes and controls that exist in the business in order to ensure the tax returns are submitted on time and for the correct amount of tax without subsequent correction. All return figures are verified back to source reports/documentation, audit tests conducted and tested where necessary back to individual transactions. Corrections for any errors are made prior to submissions. This all applies to the higher risk areas of VAT and Payroll taxes. Again various levels of review are carried out by staff and managers all underpinned by a high degree of technical knowledge, with an if in doubt, ask principle.
Tax Planning – seeking efficiency, accuracy and adding value
All businesses do some level of tax planning in order to get tax efficiency and accuracy. This could be detailed analysis of capital allowances on a new or old building, investing in research and development, maximising tax reliefs when developing new businesses and looking at the timing of transactions. These are always driven by legislation in place at the time. We do not engineer or enter in to artificial arrangements with the sole aim of avoiding the payment of the correct amounts of tax. In fact we would go out of our way to avoid anything that could be dangerous and affect our reputation or our integrity as a business
We do receive professional advice on transactions and investments from time to time from one of the large 4 accountancy firms. Generally this is to aid our navigation through legislation and ensure we pay the correct amount of tax at all times and do not fall foul to unknown consequences. This is an irregular arrangement of support for the business generally from a technical resource perspective.
We work to have a professional and accommodating relationship with HMRC. We are open, respond quickly to queries or requests we receive in the spirit of cooperation at all times. On the whole it is a positive position of equals where we show, explain or convince we are paying the correct amount of tax.
Country of reporting
Johnsons Cars Ltd only operates in the United Kingdom. 100% paid in the UK.