1. Introduction

This document sets out the Tax Strategy for Cathedral Motor Company Ltd T/a Arbury Motor Group in accordance with the requirements of paragraph 19(2) of Schedule 19, Finance Act 2016, and supports compliance with the Senior Accounting Officer (SAO) regime under Schedule 46, Finance Act 2009.

It applies to all UK taxes and duties relevant to our sector, including:
- Corporation Tax
- VAT (including Motor Dealer VAT schemes)
- PAYE and NIC (including company car benefits)
- Customs Duties
- Other relevant levies and environmental taxes (e.g. VED, Apprenticeship Levy)

The strategy is reviewed annually.

2. Approach to Risk Management and Governance

Board oversight: Responsibility for tax rests with the Board, with the Finance Director acting as SAO and reporting to the Audit Committee.
Sector-specific risks: We maintain controls around key motor trade areas:
   - VAT on new and used car sales, including the VAT Margin Scheme.
   - Manufacturer bonuses, holdbacks, and incentives, ensuring correct VAT and Corporation Tax treatment.
   - Demonstrator vehicles – tracking movements and ensuring correct output VAT and benefit-in-kind treatment.
   - Stock funding arrangements – interest deductibility and VAT on buy-back/consignment schemes.
   - Aftersales and warranty work – correct VAT treatment of repairs, parts, and manufacturer recharge arrangements.
   - Fuel scale charges – compliance with VAT rules where free or subsidised fuel is provided.
   - Staff use of vehicles – correct PAYE/NIC and P11D reporting.
Controls and monitoring:
   - Monthly reconciliations of vehicle sales VAT to stock records.
   - Documented procedures for payroll and benefits reporting.
   - Use of specialist dealer management systems (DMS) to ensure accuracy.
   - Internal reviews supported by periodic external assurance.
Tax risk register: Maintained to track sector-specific risks, with mitigating controls documented.

3. Attitude Towards Tax Planning

The Company’s tax planning reflects genuine commercial activity within the motor trade.
We do not pursue artificial arrangements aimed at avoiding tax.

Examples of acceptable tax planning include:
- Use of capital allowances and super-deduction for showroom, workshop, and EV charging infrastructure.
- VAT planning around partial exemption in aftersales operations.

External professional advice is sought for transactions such as business acquisitions, property development, or complex financing arrangements.

4. Level of Acceptable Tax Risk

The Company adopts a low risk appetite towards tax matters. We seek certainty on VAT schemes, demonstrator car treatment, and employee benefit reporting, recognising HMRC’s focus on these areas. Where uncertainty arises (e.g. evolving VAT treatment of incentives or EV-related benefits), we engage early with advisors or HMRC.

5. Relationship with HMRC

We maintain an open, transparent, and cooperative relationship with HMRC.
Our approach includes:
- Early disclosure of issues such as VAT errors identified through DMS reconciliations.
- Timely responses to HMRC enquiries and audits, particularly in relation to used car VAT, stock financing, and employee benefits.
- Collaborative resolution of technical questions where sector-specific guidance is unclear.

6. SAO Compliance

The designated SAO is Martin Dobson - Finance Director, who ensures the Company has robust tax accounting arrangements. Processes and controls are documented and evidenced (including reconciliations, control narratives, and sign-off sheets). The SAO completes the required annual certification to HMRC. Continuous training is provided to finance and operational teams to maintain awareness of tax compliance obligations, especially regarding VAT and employee benefits.

7. Review and Publication

This strategy is reviewed and approved annually by the Board of Directors and is published on the Company’s website in compliance with Finance Act 2016.

Approved by the Board of Directors on 23^rd October 2025