Literacy Capital plc publication of UK Tax Strategy
December 2024
Context
This document sets out the tax strategy for Literacy Capital plc (“Literacy Capital”) and
applies for all UK entities in the group headed by Literacy Capital (“the Group”). It is set
by the Finance Director who monitors the effectiveness and reviews the
implementation of this policy.
We consider that our tax strategy is primarily of relevance to the Board of Directors
and our Audit Committee. It is also of relevance to all finance, legal and operational
personnel at Literacy Capital and the other companies in the Group whose decisions
have tax consequences.
Literacy Capital is a closed-end investment company1 focused on investing in and
supporting UK businesses and helping their management teams to achieve long-term
success. The Group is made up of separate investment portfolio groups (“Portfolio
Groups”) which are connected via Literacy Capital’s holding. Literacy Capital is also
proud to have a charitable mission helping disadvantaged children in the UK learn to
read, giving them a fair chance in life.
Literacy Capital is unique in that we are the only investment fund of our type to have
been set up with a charitable objective. Our tax strategy reflects our commitment to
corporate responsibility, ensuring that we pay our fair share of taxes and that we act
with honesty and integrity.
How we manage UK tax risks
Literacy Capital’s investment strategy means that our portfolio investment companies
are able to operate with sufficient autonomy to help them achieve their business
objectives. Literacy Capital assists our portfolio investment companies with assessing
and managing tax risks as they arise and addressing them in a timely manner in order
to minimise exposure to tax risk. In doing so we ensure that our tax approach is applied
consistently across the Group.
We do not have an internal tax function. As such, our tax matters (both centrally and
in our portfolio investment companies) are prepared and reviewed by qualified tax
professionals, closely following the appropriate legislation and relevant guidance.
With the help of our external tax and legal advisors we continually assess changes to
the relevant tax legislation and ensure our tax practices comply with any updates to
ensure we are proactive in mitigating tax risk.
To help ensure accountability and accuracy in our reports, each Portfolio Group has
their own Senior Accounting Officer2 who has a detailed understanding of each
company’s tax accounting and maintains oversight of the accounting controls and
activities within their Portfolio Group. They are responsible for ensuring that the
Portfolio Group complies with the relevant legislation and that all of their tax liabilities
are calculated accurately and submitted to HMRC in a timely manner.
Our attitude to tax planning
The Group aims to operate in a manner that is tax efficient through claiming
appropriate tax exemptions, reliefs and incentives, as they are intended to be used by
the legislation. We make every effort to ensure we only engage in reasonable tax
planning efforts, which support our commercial objectives and ethical standards.
We do not engage in any abusive or aggressive tax planning arrangements or enter
into any schemes or transactions that are intended for tax avoidance. The Group does
not enter into arrangements that will result in a different tax position than that intended
by legislation. We do not tolerate or facilitate any activity that could be considered tax
evasion.
All intra-group transactions are required to be priced on an arm’s length basis in
accordance with internationally accepted transfer pricing standards and local tax
laws.
Accepted Level of Risk
We operate with a limited appetite for tax risk due to the strong link between our tax
strategy and our commitment to corporate responsibility. We do not make tax
decisions or enter into arrangements that would facilitate a risk of producing a tax
result that contravenes the spirit of the legislation.
We have a responsibility to our shareholders and employees to ensure that we do not
incur unnecessary tax liabilities which could damage our business. We therefore take
steps to ensure that we pay the correct amount of tax as intended by the relevant
guidance and legislation.
Working with HMRC
Literacy Capital and the Group have a transparent relationship with HMRC. We are
committed to building and maintaining a constructive relationship.
All queries or further information requests from HMRC will be dealt with in a timely
manner so as to facilitate the fast resolution of any discrepancies and maintain a
professional standing with HMRC.
We regard this document as complying with our duty to publish a UK group tax strategy
for the year ending 31 December 2024 in accordance with Schedule 19, paragraphs 16(2)
FA2016. Members of the Group covered by this tax strategy are those entities in which
Literacy Capital has a direct or indirect holding of over 50% of ordinary share capital. In
this strategy, references to “the Group”, “Portfolio Group” and “we” are to all these entities.
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1Literacy Capital is also an Investment Trust as defined by s1158 CTA 2010.
2 For companies joining the Group in the future, the Senior Accounting Officer will be appointed in
line with the statutory time limits.