Tax strategy 2021

Introduction

The Promethean Group (“Promethean”) is a brand leader in the global market for interactive learning technology. The principal activities are the creation, development, supply, and support of leading-edge, interactive learning technology primarily for the education market.

The tax strategy published herewith applies to Promethean’s UK tax resident companies (“Promethean UK”) for the fiscal year ending 31 December 2021. Namely:

  • Promethean World Limited – Holding Company
  • Chalkfree Limited – Holding Company
  • Promethean (Holdings) Limited – Holding Company
  • Promethean Limited – Operating Entity

Promethean is a Multi-National Enterprise (MNE) whose ultimate parent entity is NetDragon Websoft Holdings Limited (“NetDragon”). NetDragon is listed on the Hong Kong Stock Exchange (HKSE: 0777) and is a leading innovator and a creative force in China’s online gaming and mobile internet industries. NetDragon has also grown into a principal force to promote educational development and innovation in the internet and mobile education industry and is striving to build a global life-long learning community.

Promethean Limited is a main operating subsidiary of the Promethean Group, incorporated in 1977 and headquartered in Blackburn, UK with additional offices worldwide. Promethean Limited functions as a head office for the local region and internationally (other than the USA, Canada, and Caribbean), and it also shares in the research and development of the hardware and software products of the Promethean Group.

The UK tax strategy of Promethean UK is set out below and has been prepared pursuant to Schedule 19 of the Finance Act 2016 (“Schedule 19”). The UK tax strategy applies to UK taxation as defined in Schedule 19. UK taxation references are to the taxes and duties in the UK which include: all corporate income taxes, indirect taxes, employment taxes, and other applicable UK tax matters. 

In general, Promethean’s business is built on a foundation of honesty and integrity.  Promethean’s Code of Ethics and Standards of Business Conduct Policy (“Code of Conduct”) applies to all Promethean employees worldwide and reflects Promethean’s commitment to honest and ethical business practices and provides standards and guidelines for all Promethean employees and others doing business with Promethean, such as customers, suppliers, and partners. The standards and guidelines set out in the Promethean’s Code of Conduct are intended to promote and reflect high standards of integrity and compliance with all applicable laws, rules, and regulations. 

This document was drafted by Promethean’s in-house tax team and was approved by Promethean’s Board of Directors. The UK tax strategy is subject to annual review and will be published annually before the end of each financial year.

The approach of Promethean to risk management and governance arrangements in relation to UK taxation

Promethean’s Director of Corporate Tax is based at the global headquarters in Seattle, USA. The US based in-house tax team extends to the UK, and a Senior Tax Manager is charged with the day-to-day management of Promethean’s UK tax affairs and the setting of tax policies and procedures for Promethean’s UK entities in line with UK requirements. The tax team has adequate training, skills, and qualifications for the role and complexity of duties they carry out. This includes regular updates from professional advisors, reading tax journals, and attending webinars as well as other continued professional development.

In addition, the UK based Senior Tax Manager is a member of the CIOT and Chartered Tax Advisor (CTA). The US-based Director of Corporate Tax is a Certified Public Accountant (CPA) in the US. The Director of Corporate Tax has responsibility for the global tax function including the UK and is accountable to the Chief Financial Officer. Ultimate responsibility for managing Promethean’s tax risks and tax compliance lies with the Board, with this responsibility delegated to the Chief Financial Officer.

Promethean is committed to observing all applicable laws, rules, regulations, and reporting and disclosure requirements in all business jurisdictions including the UK. The in-house tax team proactively manages and reviews all tax risks and collaborates with Promethean’s operations, legal, HR and finance functions, along with other personnel to provide advice and guidance as necessary to ensure compliance, including seeking external tax advice, where necessary. In addition, Promethean with guidance from external advisors adheres to the approach and the methods recommended by the OECD transfer pricing guidelines in relation to its group entities which are compliant with the laws of the relevant jurisdictions.

Specifically, Promethean’s tax team provides advice to the business on UK tax-related issues, oversees UK tax compliance-related matters, considers the impact of any changes in UK tax legislation, and manages Promethean UK’s relationships with HMRC and external advisors. Promethean’s tax team routinely obtains advice from external UK tax advisors, which forms a key part of the UK tax return process.

Attitude of the group towards tax planning

Promethean is fully committed to conducting its affairs in accordance with all legal and regulatory obligations of the jurisdictions in which it operates, including the UK. All transactions entered into must have commercial rationale and substance, in addition to being consistent with the highest standards of conduct in line with Promethean’s Code of Conduct and guiding business principles and policies. Those guidelines are clear in that Promethean’s actions must be built on a foundation of honesty and integrity whilst complying with all applicable laws, rules, and regulations. Key business decisions will be made with an understanding of the tax consequences with due regard to protecting shareholder value. Promethean will not engage in artificial arrangements for the sole purpose of avoiding or reducing tax.

Where there are any decisions to be made in respect of uncertain or complex tax issues, these will be made with an understanding of the tax consequences and with technical advice from the Promethean tax team and, where appropriate, in consultation with experienced external advisors. External advice is often sought by the tax team to ensure commercial activities are undertaken in compliance with applicable tax legislation.

Level of acceptable risk in relation to UK taxation

Promethean UK is committed to managing tax risks and structures its business transactions and decisions based on sound commercial principles and in accordance with relevant UK tax legislations. Where there is significant uncertainty or complexity, external advice is sought, and Promethean UK proceeds accordingly.

Promethean UK does not engage in aggressive tax planning and does not have a high tolerance for tax risk.

Approach towards dealings with HMRC

Promethean UK engages with HMRC in a transparent, efficient, and professional manner. Promethean UK provides all information requested by HMRC in a timely manner and consistently strives to meet all filing requirements and compliance obligations. Promethean is committed to continuing with this approach and being consistent with Promethean’s Code of Ethics and Standards of Business Conduct.