A message from Robert Forrester, CEO of Vertu Motors plc.

Tax Strategy

In compliance with Schedule 19 of the Finance Act 2016 Vertu Motors plc and its subsidiaries publish the following tax strategy which documents its approach in managing its tax affairs.

For the purposes of the Group's tax strategy, tax is defined as all forms of direct and indirect charges including corporation tax, VAT, employment taxes, stamp duty and excise and import duties.

Strategic Aim

The Group's strategic aim is to pay, accurately and on a timely basis, those taxes that are fairly levied in the UK, and to maintain a high quality of tax management and compliance while minimising tax risks and preserving the Group's integrity and reputation.

The Group is fully committed to the prevention of the facilitation of tax evasion and has a non-tolerance policy with respect to tax fraud.

Tax Governance and Oversight

The Chief Financial Officer is responsible for the Group's tax strategy which is overseen and approved by the Board of Directors. The implementation of the tax strategy is delegated to the Group Tax Manager who is supported by the Group's finance team to ensure in its delivery.

This tax strategy document, which includes a tax risk and controls matrix, will be reviewed on an annual basis by the Chief Financial Officer, Deputy CFO and Group Tax Manager and any amendments will be approved by the Group Audit Committee and the Board of Directors.

All significant investments and strategic developments will be reviewed by the Deputy CFO and Chief Financial Officer who will ensure that any potential tax consequences of new developments are considered on a timely basis.

The Group has fulfilled all its obligations in regard of the Senior Accounting Officer legislation and has also undertaken steps, under the Corporate Criminal Offence legislation, to profile and manage the risk of failing to prevent the facilitation of tax evasion.

Tax Risk and Control

The Group's objective is to ensure that appropriate tax compliance procedures, processes and systems are in place to minimise risk and quickly identify errors. Our systems are either industry widely used or in-house developed which have been rigorously tested to ensure compliance with UK tax laws. The systems and processes are fully integrated and standardised throughout the Core Group and ensure that timely and accurate returns and payments are maintained. The controls are reviewed on a regular basis for improvements and to ensure that any changes to tax legislation are implemented by the Central Function (Group Tax Manager, Company Secretary, Chief Financial Officer) in an accurate and timely manner.

The Group tax department fulfils the role of tax specialist regarding UK taxes and ensures that the payment and compliance of direct and indirect taxation is managed on an accurate and timely basis. The dealerships' finance function, overseen by the Divisional Finance Directors, is responsible for the processing of transactions in accordance with the Group's standard tax accounting procedures. The Group Tax Manager and the internal audit function ensures this compliance through our audit procedures. Any errors identified are corrected in the appropriate manner and, if necessary, procedures are amended to prevent the error reoccurring.

For corporation tax the Group Tax Manager and external advisors are responsible for the review and preparation of the tax returns. Reasonable steps have been taken to ensure that the provider of any tax outsourced advice is suitably competent. We expect to be fully compliant with Making Tax Digital with our VAT return digitally linked to our underlying accounting records and submitted to HM Revenue & Customs, (HMRC), using cloud-based software.

The Group's tax policies and procedures are available to all employees on the Group's internal intranet. We also ensure that all accountants receive adequate tax training on induction and annually in the application of the Group's tax accounting policies and procedures and that the Central Function maintain an appropriate level of experience and training to fulfil their review and oversight roles.

Tax Planning

Strategic and operational decisions will be commercial rather than tax driven, and while tax planning ideas will be considered they will only be adopted when they fit with the commercial facts of the decision being taken. The Group does not structure transactions in a way which gives a tax result contrary to the intentions of applicable legislation.

The Group utilises available tax incentives and reliefs provided for in UK tax law, such as capital allowances and research and development credits, and we seek external advice to ensure our compliance in these areas. We also seek external advice on any potential acquisition and disposal in order that all significant exposures are identified and that all taxes are accounted for correctly.

The Group will not adopt fiscal structures or tax 'products' which require formal notification to HM Revenue & Customs under the Tax Avoidance Schemes and the Group's tax posture is risk averse.

Relationship with Tax Authorities

We maintain an open and honest relationship with HMRC in all tax matters and keep them informed of any changes to the business' structure. We have worked collaboratively with HMRC to ensure that enquiries and audits are completed with transparency and integrity and in a timely manner and will continue to do so. HMRC's risk reviews to date have not resulted in any significant errors and the Group has not incurred any inaccuracy penalties. Consequently, the Group currently holds a low risk status. We are committed to resolving any issues and irregularities with significant tax implications or uncertainty in the interpretation of the tax laws with HMRC promptly and in an open and constructive manner.