University Tax Strategy
Introduction and Scope
The University of Warwick was established by Royal Charter granted in March 1965. It is an exempt charity within the meaning of Part 3 of the Charities Act 2011. Consequently, it is a charity within the meaning of Para 1 of schedule 6 to the Finance Act 2010 and accordingly, the University is potentially exempt from taxation in respect of income or capital gains received within categories covered by section 478-488 of the Corporation Tax Act 2010 (CTA 2010) or section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied to exclusively charitable purposes. The University may be subject to tax on income arising outside these exempt activities.
The University receives no similar exemption in respect of Value Added Tax or Employment taxes.
The exemptions available to the University and referred to above are based on UK legislation. Similar exemptions may not be available to the University in respect of its activities or those carried out on its behalf by employees or representatives, which take place overseas.
Certain commercial activity is operated through subsidiary companies. The University’s subsidiaries and associated undertakings are liable to Corporation Tax in the same way as any other commercial organisation.
The operations of the University and its subsidiaries are varied and sometimes complex. This naturally drives some inherent level of complexity in its tax affairs.
This document sets out the University’s policy and approach to conducting its tax affairs and the management of its tax risk. The document is approved by the Group Finance Director and the University’s Finance and General Purposes Committee (FGPC). The strategy applies from the date of publication until it is superseded. The strategy will be reviewed annually and any amendments will be approved by FGPC prior to publication.
The strategy applies to the University and its subsidiaries. In this document any reference to the University is to the University and its subsidiaries. Details of the University’s subsidiaries are listed at:
Active Companies: https://warwick.ac.uk/services/finance/corporate_information/wholly_owned/
Dormant Companies: https://warwick.ac.uk/services/finance/corporate_information/dormant/.
Any reference to “tax”, “taxes” or “taxation” are to UK taxation and to all corresponding worldwide taxes and similar duties in respect of which the University has any legal obligations.
In accordance with the University’s overarching commitment to adhere to the best ethical and professional standards the University conducts its tax affairs consistent with the following principles:
- Seeks to comply with all relevant tax laws, rules, regulations and reporting requirements wherever it operates.
- Ensure that the tax strategy is at all times consistent with the University’s overall strategy, approach to risk and its core values.
- Apply due diligence and care to the management of risks associated with tax matters and ensure that governance and assurance procedures are appropriate.
- Foster constructive, professional and transparent relationships with tax authorities, based on concepts of integrity, collaboration and mutual trust.
- Use incentives, reliefs or, where appropriate tax structures, to minimise the tax cost of adopted business models but not entering into transactions that have the main purpose of gaining a tax advantage or intentionally interpreting tax law in a way contradictory to the original intention of the legislation. Where savings are achieved these will be reinvested in the core activity of the University.
The University’s Council is the executive governing body of the University with particular managerial responsibilities for finance and the University estate, and also a more general remit to oversee the conduct of University business. The Council is supported by a number of committees who operate through delegated authority. The University’s Finance and General Purpose Committee has responsibility for the tax affairs of the University. The University’s overall risk management and internal controls are overseen by the Audit Committee.
Day-to-day responsibility for tax rests with the Group Finance Director and the Director of HR, (for employment taxes). The Group Head of Tax, reporting to the Director of Financial Strategy and Reporting has day-to-day authority to manage the tax affairs of the University, supported by a small, dedicated tax team. The Tax team work closely with the Payroll team in respect of UK and overseas employment taxes.
The Group Head of Tax with the support of the Director of Financial Strategy and Reporting and the Group Finance Director ensures that the team:
- Is comprised of appropriately qualified and experienced personnel and is suitably resourced
- Are committed to ongoing Continuing Professional Development.
- Are apprised of, and contribute to the work of, the British Universities Finance Directors Group (BUFDG).
- Proactively act as business partners to academic and non-academic departments across the University to provide timely advice and guidance as required to ensure compliance and to identify opportunities.
- Provide regular internal training and reference material to staff to highlight tax issues and treatments particular to the Higher Education sector, together with changes in legislation.
- Seeks professional advice from appropriate external advisors where the tax treatment of specific transaction is uncertain, requires external consideration or confirmation, or requires specialist knowledge.
- Liaises with colleagues within the Higher Education sector through BUFDG or informally to ensure the University maintains HE sector best practice.
The University’s financial regulations set out the requirements for all departments across the University to involve the Tax Team in new, material, changing or international activities. (Financial Regulation 22) and to obtain the appropriate financial sign off for Research Grants and Contracts (FP14) and Non-Research contracts, commercial and other trading (FP11).
Only the Group Head of Tax; the Group Finance Director and the Director of Human Resources (for employment taxation) or their nominated representatives are authorised to give advice on tax or tax related matters or to seek the advice of external advisors.
Internal processes and controls operate across the University with the aim of ensuring accurate and complete tax and financial records.
Tax Risk Management
Diligent professional care and judgment is employed when assessing tax risks. In reviewing risks and in line with the Tax Policy the following will be considered:
- The maintenance of corporate reputation.
- The tax benefits and impact on the University’s reported results compared to the resource and financial costs involved, including risks of penalties and interest.
- The wider consequences of potential disagreement with the Tax Authorities, including any possible impact on the on-going relationship with Authorities.
- The University will not enter into any transaction where the main purpose is to gain a tax advantage.
Relationship with Tax Authorities
The University seeks to have a transparent and constructive relationship with Tax Authorities wherever it operates. All dealings with Tax Authorities and other regulatory bodies are conducted professionally, courteously and collaboratively in a timely manner. In respect of the UK and its relationship with HM Revenue and Customs the University seeks to:
- Have regular meetings and correspondence with the HE sector team at HMRC
- Make fair, accurate and timely disclosures as soon as reasonably practical once they have been identified.
- Work collaboratively with HMRC should disagreements arise to resolve issues by agreement (where possible).
- Proactively enter into dialogue with HMRC with regard to issues where treatment is uncertain.
Dated: 21 June 2022
Next review due: 1 June 2023