Tax Strategy for 2020/21
1. Introduction and scope
1.1 City, University of London (“City” or the “University”) is an independent corporation granted the status of a University in 1966 by Royal Charter and now also governed by a Supplemental Charter of 2016, granted to mark the accession of City to the University of London.
1.2 City has charitable status (exempt from registration with the Charities Commission) and its charitable status is regulated by the Office for Students. City is an exempt charity under the terms of the Charities Act 1993.
1.3 The University is recognised and recorded at Companies House with the registration number of RC000121.
1.4 The University’s two active wholly owned subsidiaries are City Foundations Limited (registration number 6974838), which owns 50% of the joint venture with the INTO Group. The other subsidiary is City Entrepreneurship Limited (registration number 07298148) which holds various investments relating to Cass Business School.
1.5 This document, approved by the Chief Financial Officer (CFO) (on behalf of and subject to prior approval by City’s Executive Team), sets out City’s policy and approach to conducting its tax affairs and management of tax risk. The strategy will be reviewed annually and any amendments will be ratified as necessary by the Executive Team.
1.6 This Tax Strategy applies to City and to its subsidiary companies. A list of the entities to which it applies is set out in section 6 below. All references to “City” or the “University” in this strategy are to all these entities.
1.7 References to ‘tax, ‘taxes’ or ‘taxation’ are both to UK taxation and to all corresponding worldwide taxes and similar duties in respect of which the University has legal obligations.
2. Tax policy - principles
2.1 City’s policy approach to conducting its tax affairs is aligned with its overall strategic plan, which is underpinned by sector leading standards of corporate governance and a risk management framework.
2.2 The University is committed to conducting its tax affairs consistent with the following principles:-
- Comply fully with all relevant laws, rules, regulations, statutory reporting and disclosure requirements wherever it operates
- Ensure that the tax strategy is at all times consistent with the University’s overall strategic plan, its approach to risk and its values
- Apply professional diligence and care in the proactive management of all 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 principles of integrity and collaboration
- Take advantage of all relevant available reliefs, exemptions and incentives, when practical and economical to do so, in order to optimise its tax position in the conduct of its activities, but will not use them for purposes which are knowingly contradictory to the intent of and the spirit of the legislation
3. Governance in relation to taxation
3.1 The University operates in accordance with its Statutes and Ordinances, and Council is responsible for the administration and management of the affairs of the University. Council is the University’s governing body and is the legal persona of the University. Council comprises a number of members, including ex-officio, appointed and elected lay members.
3.2 Council delegates the responsibility for managing the University’s day to day affairs to The President, who delegates authority to the Chief Financial Officer to manage the University’s financial activities, which include all areas of taxation.
3.3 Whilst it is recognised that all employees have a duty to comply with tax law, the ultimate responsibility for the day-to-day operation of the University’s tax affairs rests with the CFO and Finance Directorate. Reporting to the Finance Director, the Assistant Director: Corporate Finance has day-to day authority to manage the tax affairs of the University and acts as the main co-ordinator of City’s external Tax and Vat Advisors. City’s Tax and VAT Advisors are Grant Thornton, who were appointed in September 2017, following a competitive tender exercise.
3.4 The Assistant Director: Corporate Finance ensures that relevant members of City’s Finance Directorate:
- Are comprised of appropriately qualified, experienced personnel and is suitably resourced;
- Are committed to ongoing Continuing Professional Development and are members of the British Universities Finance Directors Group (BUFDG). Appropriate training is undertaken to ensure the Finance Directorate keep abreast of changes in tax legislation and best practice;
- Acts as a business partner to the various Schools and departments across the University to provide advice and guidance as necessary and in a timely manner to ensure compliance;
- Seeks professional advice from suitably qualified external advisors where the tax treatment of specific transactions or other matters is uncertain or requires external consideration and confirmation;
- Conducts risk assessments including consideration of any reputational risk arising from the University’s approach to conducting its tax affairs, such as those enshrined within the Criminal Finances Act 2017;
- Liaises with colleagues within the University sector through BUFDG and also informally with others to ensure the University maintains sector best practice.
3.5 The Finance Directorate will use appropriate and effective risk management processes and controls to provide assurance that the requirements of the University Tax Strategy are being met. This will include compliance and risk monitoring systems as well as internal reviews of tax compliance activities across the University.
4. Attitude to Tax Planning and level of risk
4.1 City’s attitude and approach towards tax planning is to seek to optimise its tax position by taking advantage of available tax reliefs, exemptions and incentives aligned with, and in the intended spirit of, current tax legislation, thus retaining and optimising funds available to further the University’s core activities and strategic aims. This is done wherever practical and economical to do so.
4.2 The University aims to pay the right amounts of tax legally due both in the UK and overseas, recognising that it has a fiduciary duty to act exclusively in its best interests as a charity in the management of its affairs and the application of its property to further the University’s purposes for the public benefit. This duty makes it appropriate for City to engage in reasonable and prudent tax planning and to take advantage of available statutory tax reliefs and exemptions relating to charities where these will assist the work of the charity, encourage genuine donations and coincide with the purposes for which these reliefs and exemptions were created.
4.3 Professional diligence and care is applied in the proactive assessment of tax risks and within the overall governance and risk framework set by Council, with a generally cautious approach to risk. Clear and robust conclusions are required on both the level of risk and how the risk should be managed to ensure compliance with its statutory obligations and in a manner which facilitates payment of the correct amount of tax.
4.4 In circumstances where the correct amount of tax amount may not be clearly defined, or where an alternative interpretation or application of tax law might result in different tax outcomes, the risk will be assessed in a controlled manner, applying best judgement to determine the appropriate course of action. This will usually involve seeking advice from external professional advisers in support of our decision-making process. City will not, under any circumstances, enter into transactions that have a main purpose of gaining a tax advantage or intentionally make interpretations of tax law that are opposed to what is generally accepted to be the original intention or spirit of the legislation.
4.5 City seeks to fully comply with its all obligations under current legislation, including the Criminal Finances Act 2017. The risk assessment carried out as part of this legislation is reviewed periodically and acts as a guide in determining what and where City’s main risks of tax evasion lie. Reasonable and proportionate risk-based prevention procedures are put into place in order to manage these.
5. Relationships with tax authorities
5.1 The University seeks to have a transparent and constructive relationship with tax authorities wherever it operates around the world. All dealings with tax authorities and other regulatory bodies will be conducted professionally, courteously, collaboratively and in a timely manner to ensure that the University’s aim to meet all its statutory and legislative tax requirements globally are fully met.
5.2 As part of this, and in the context of the University’s relationship with HMRC and other tax authorities (such as the UAE Federal Tax Authority (FTA)), City’s Finance Directorate, primarily through its Advisors, commits to:
- Meeting and communicating with relevant authorities in respect of developments in the University’s activities, current, future and retrospective tax risks, governance and interpretation of the law in respect of all relevant taxes;
- Engage in full, open and early dialogue with the authorities to discuss tax planning, strategy, risks and significant transactions;
- Make fair, accurate and timely disclosures as soon as reasonably practical after they are identified;
- Aim to minimise the risk of future challenge to any tax positions taken and gain certainty in the University’s tax affairs by proactively entering into dialogue in real time with regard to issues where the correct treatment is uncertain;
- Seek to resolve issues on a real time basis and before returns are filed if possible, and where disagreements arise, work with the relevant authorities to resolve issues by agreement (where possible);
- Respond to Tax Consultations as appropriate, either directly with authorities or via the University Sector representative association, UFDG. These latter routes will continue to be used for issues pertaining to the University and Charity Sectors.
6. Other information
6.1 Any questions in respect of this Tax Strategy document should be referred to the Assistant Director: Corporate Finance.
6.2 List of the entities to which this document applies:
- City, University of London
- City Foundations Limited
- City Entrepreneurship Limited
Approved by the Executive Committee on 22 June 2020