The purpose of this document is to set out Liverpool School of Tropical Medicine’s tax policy and approach to its tax affairs, managing tax risk and ensuring that the risk of non-compliance is mitigated and minimised.
LSTM is an exempt charity within the meaning of Part 3 of the Charities Act 2011, it is therefore a charity within the meaning of Para 1 of schedule 6 to the Finance Act 2010 and accordingly, LSTM 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.
IVCC is an exempt charity within the meaning of Schedule 2 of the Charities Act 1993 and as such is a charity within the meaning of Section 506(1) of the Income and Corporation Taxes Act 1988. IVCC is potentially exempt from taxation in respect of income or capital gains received within categories covered by Section 505 of the Taxes Act 1988 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.
LSTM and its UK subsidiaries are registered for VAT. Irrecoverable VAT on inputs is included in the costs of such inputs. LSTM itself is entitled to partial exemption on VAT under a calculation agreed with HMRC.
Certain of LSTM's UK subsidiary entities are trading companies and are liable to Corporation Tax in the same way as any other commercial organisation.
This tax strategy applies to Liverpool School of Tropical Medicine and all its UK related, subsidiary entities in accordance with Section 16(4) of Schedule 19 of the Finance Act 2016. References to “LSTM” are to LSTM and all its related subsidiaries. The strategy relates to the year ended 31 July 2019 and applies from the date of publication until it is superseded.
The Board of Trustees have delegated responsibility for ensuring the appropriate management and implementation of LSTM’s tax strategy to the Finance and Investment Committee. In practice, this is delegated to the Finance Department with oversight by the Finance and Investment Committee.
The Finance Director is responsible for advising LSTM, in the light of guidance issued by the appropriate bodies and relevant legislation as it applies, on all taxation issues.
The Finance Director will issue instructions and guidance to Departments on compliance with statutory requirements including those concerning VAT, PAYE, national insurance, corporation tax, overseas taxes and import duty.
The Finance Director is responsible for LSTM's Tax Strategy. The Strategy will be reviewed annually and updated to reflect the changing and emerging risks and approved by the Finance and Investment Committee and the Board of Trustees.
The Finance Director is responsible for maintaining LSTM’s tax records, making all tax payments, receiving tax credits and submitting tax returns by their due date as appropriate.
LSTM is committed to ensuring it conducts its tax affairs in line with ethical and professional standards and that its tax strategy is consistent with LSTM's Strategy and values. LSTM's approach is to be prudent and conservative with tax planning and apply a generally cautious approach to tax risk.
LSTM will ensure it is fully compliant with all tax laws, regulations and reporting requirements both in the UK and any other jurisdictions it operates in. LSTM will apply diligence and care to the management of risks associated with tax matters and ensure that strong and reliable governance, systems and controls are in place.
LSTM seeks to have a transparent and constructive relationship with HMRC, based on integrity, collaboration and mutual trust.
LSTM acknowledges the risks inherent in its business and is committed to managing those risks that pose a significant threat to the achievement of its objectives and financial health and reputation, by making a commitment to allocate resources to address areas of high exposure.
LSTM has appointed professional tax advisors and the Finance Operations team have access to a VAT helpline provided by the advisors, as well as the ability to engage them to provide more substantial pieces of work. The advisors will be used wherever there is a more complex tax issue to resolve.
LSTM maintains a tax risk register, covering all areas of tax and all levels of risk . This list is reviewed regularly during the year, with priority given to the areas considered highest risk due to the inherent nature of the issue or quantification of impact, and following discussion with the professional tax advisors on a quarterly basis where relevant.
The Finance Director has responsibility for the tax affairs of LSTM. The Finance OperationsTeam assists the Finance Director to manage the tax affairs of LSTM and the Finance Director ensures that the Finance Operations Team is comprised of appropriately qualified and experienced personnel and is suitably resourced.
The relevant members of the Finance Operations Team ensure they keep up to date with relevant tax regulations through the use of the British University Finance Directors Group (BUFDG) updates, training and guidance, alerts from professional advisors and through liaising with colleagues within the sector to ensure LSTM maintains best sector practice
Internal control processes and procedures across LSTM exist with the aim of ensuring that information and underlying documentation for tax returns and submissions are accurate and complete. Tax returns and submissions are subject to appropriate levels of review prior to their submission.
LSTM's approach to tax planning is conservative. LSTM will make use of available tax incentives, exemptions and reliefs to minimise the tax cost of its activities to retain more funds to further our strategic aims.
LSTM will not enter into transactions where the main purpose is to gain a tax advantage or intentionally interpret tax laws and legislations to obtain a tax advantage that is not considered to be within the spirit of the legislation.
LSTM aims to pay the right amount of tax legally due both in the UK and overseas. In circumstances where this is not clearly defined or where alternative interpretations or applications of tax law might result in different tax outcomes, LSTM will apply best judgement to determine the appropriate course of action. This will usually involve seeking advice from external professional advisors.
Relationship with HM Revenue & Customs "HMRC"
LSTM seeks to have a transparent and constructive relationship with HMRC. All dealings will be conducted professionally, courteously and collaboratively. LSTM’s aim is to meet all its statutory and legislative tax requirements.
In June 2018 HMRC assigned LSTM a Customer Compliance Manager (CCM) and several meetings have been held with the CCM and their team since to broaden HMRC’s understanding of LSTM and its tax affairs.
As part of this relationship with HMRC the LSTM's Finance Operations Team will:
- Be proactive, open and honest in our dialogue with HMRC if we become aware of any tax issues.
- Provide a prompt response to any requests for information from HMRC and ensure that all their requests are actioned.
- Where appropriate enter into dialogue with HMRC with regard to items of contention or where the correct treatment is uncertain.
- Regularly review dispensations and partial exemption methods with HMRC.
- Respond to consultations as appropriate