1. Introduction
1.1 Background
This document sets out the tax strategy and strategic tax objectives for the UK subsidiary, Nuctech London Company Limited, of the group headed up by Tongfang Co Ltd, a listed company in China.
Nuctech London Company Limited is a subsidiary of Nuctech Company Limited (“Nuctech”) who derived from Tsinghua University and founded in 1997. Nuctech is one of the most advanced security and inspection solution and service suppliers in the world. The company supplies the most advanced technology, superb products and integrated solutions in the security inspection industry to customers in many different countries worldwide.
Nuctech London Company Limited was incorporated on 30 June 2020. The company is 100% owned by Nuctech Hong Kong Ltd registered in Hong Kong and the ultimate parent company is Tongfang Co Ltd, which is a listed company registered in Beijing.
This strategy has also been developed in compliance with Schedule 19 of the UK Finance Act 2016, which requires large groups to publish their UK Tax Strategy, and applies to the year ended 31 December 2023.
1.2 Scope
The tax strategy and the strategic objectives set out in this document are tailored towards establishing a clear approach to the various aspects of tax reporting and compliance for the UK operations of Nuctech London Company Limited. References to “tax” in this document encompass the following taxes in the UK: corporate tax, income tax, indirect tax, and employment tax.
1.3 Ownership and audience
This strategy is owned by Senior Management at Tongfang Co Ltd and will be reviewed and approved by the Board of Directors (“BoD”) of Nuctech London Company Limited. This strategy is applicable to various stakeholders including the BoD, all finance personnel, and in particular, any professionals employed by Nuctech London Company Limited, who have responsibilities in relation to tax in the UK.
2. Business Strategy
2.1 Group overview
Nuctech London Company Limited is a subsidiary of Tongfang Co Ltd in China focused on projects and operations carried out in the UK, in particular the sales and maintenance of x-ray security inspection systems, such as container and vehicle inspection system, baggage and parcel inspection system and body inspection system which is used by the company’s customers in the UK. The subsidiary provides strong support for the development of its head office's global business and operations.
3. UK Tax Strategy
3.1 UK Tax Strategy statement
3.1.1.Tax governance and risk management
The UK management team are responsible for monitoring the day to day operation of tax, for the UK branch. The Senior Management of Tongfang Co Ltd have ultimate responsibility and will provide oversight to the UK team with the UK team reporting regularly into Senior Management. If risks are identified, the UK team will communicate to Senior Management to discuss the risk, the impact and the potential solutions.
External advisors are consulted on a regular basis to manage tax risks and ensure the group are compliant with their UK tax obligations. If any significant issues are identified by the UK management team, this would be reported to Tongfang Co Ltd BoD for their review and action.
3.1.2.Attitude towards tax planning and approach to tax
The approach to tax and tax planning for Tongfang Co Ltd, and their subsidiary Nuctech London Company Limited, is carefully aligned to the group’s strategic and corporate objectives and compliance is core to each undertaking made by the group in this respect. Tongfang Co Ltd aim to comply with all applicable tax laws and regulations in all jurisdictions, including the UK, however the company will accept benefit from legitimate tax incentives, exemptions and reliefs, if applicable, which are offered by the UK Government to all taxpayers such as capital allowances relief.
Tongfang Co Ltd will consider the most tax efficient way to undertake business transactions however transactions will always be underpinned by commercial activities and objectives and will be implemented only where this is legitimately structured within the regulations. Tongfang Co Ltd will not enter into wholly artificial arrangements. All transactions will also follow the arm’s length principles in line with the group’s Transfer Pricing policies and the OECD guidelines.
3.1.3.Tax Risk
Tongfang Co Ltd have a low tolerance towards tax risk and the group proactively engage with advisors to achieve certainty on the tax position which is aligned to the overall approach to risk.
3.1.4.Relationship with HM Revenue and Customs
Tongfang Co Ltd aim to be open and transparent in all dealings with HM Revenue and Customs and maintain a proactive relationship, encouraging open dialogue on a timely basis, and seeking clearances where necessary. Where any tax law is unclear or subject to interpretation, Nuctech London Company Limited will engage with external tax advisors to ensure that they remain compliant in all operations. Where applicable the group will work with HMRC to attempt to resolve any differences in a timely and professional manner.
- December 2023