<h1>Approach to the management of UK Taxes for the year ended 31<sup>st</sup> December 2022</h1>
<p><strong></strong><strong>Introduction</strong></p>
<p></p><p>The Porterbrook Group (see the list of group entities at the end of this statement) leases trains and provides maintenance services to customers based in Great Britain. All entities in the Porterbrook Group are UK resident for tax purposes. The Group complies with the tax law and practice of the UK. Compliance for the Group means paying the right tax at the right time which involves the following points which are covered later in this statement:</p><p></p>
<ul><li>an open dialogue with HMRC to disclose relevant facts and circumstances relating to significant tax matters;</li><li>having appropriate tax governance and tax accounting arrangements in place;</li><li>applying tax legislation within the spirit and intention of Parliament, noting that this may not always be clear and the Group’s view could differ from HMRC’s;</li><li>seeking tax efficiency to maintain the Group’s competitive position by claiming tax reliefs and incentives where available; and </li><li>operating in line with this statement</li></ul>
<p></p><p>The publication of this statement was approved by the Board of Directors at a meeting on 29<sup>th</sup> September 2022 and is regarded as satisfying the statutory obligation under Para 16 (2) Schedule 19, Finance Act 2016 for all entities listed at the end of this statement.</p><p></p>
<p><strong>Attitude towards tax planning</strong></p>
<p></p><p>Porterbrook seeks appropriate external professional advice in the areas of tax compliance and delivery. Where tax planning is undertaken with assistance of the Group’s professional advisors, it is to support genuine commercial activity and will have regard to the potential impact on the Group’s reputation. Assessment of UK tax laws will form part of the appraisal of commercial opportunities that have been identified to maximise value for the Group’s Shareholders on a sustainable basis. All aspects of commercial opportunities (including tax) are subject to appropriate review and approval processes. Where significant tax uncertainty exists, we will seek to reduce any risk through open dialogue with HMRC.</p><p></p>
<p><strong>Level of risk accepted</strong></p>
<p>Porterbrook’s objective is to manage its tax affairs so that the risk of material tax errors remains low. This risk appetite has been set and agreed by the Group Board, which includes representatives from each member of the consortium that owns the Group.</p>
<p>Given the scale, and specifically the tax complexity, of key aspects of the Group’s activities (namely corporation tax on leasing and financing transactions), risks will inevitably arise from time to time in relation to the interpretation of tax law. To minimise its tax risk, Porterbrook aims to comply with all relevant tax laws, regulations and disclosure requirements. To do this, Porterbrook, after seeking external advice as required, will apply legislation within the spirit and intention of Parliament. Where this is not clear in respect of material items, Porterbrook seeks further clarification from HMRC, following which we note that Porterbrook’s view could still differ from that of HMRC.</p>
<p></p><p>We proactively identify and evaluate tax risks, and the impact that any new legislation has on these tax risks and they are reported to and monitored by the Group’s Board.</p><p></p>
<p><strong>Approach to dealing with HMRC</strong></p>
<p></p><p>Led by the Chief Financial Officer and supported by the Board, Porterbrook seeks to have an open, professional, transparent and honest dialogue with HMRC regarding all taxes and duties, which should include at least one face to face meeting each year, wherever possible. Through regular real-time communication with the HMRC Customer Compliance Manager, Porterbrook informs HMRC of relevant events as they arise which could have a material impact on its tax reporting.</p>
<p>Where there are areas of significant tax uncertainty Porterbrook presents its analysis to HMRC with the intention of reaching agreement on treatment in advance of preparing and submitting the relevant returns. Where agreement cannot be reached in these timescales, and in relation to all relevant tax issues, the approach adopted in the return will be appropriately disclosed. </p>
<p>Porterbrook will respond to HMRC requests as soon as reasonably possible and agree a reasonable timetable for response with HMRC.</p>
<p>Porterbrook contributes to the development of tax legislation where appropriate, either directly with HMRC through public consultation processes or indirectly via industry representative bodies.</p>
<p><strong>Governance and Risk Management</strong></p>
<p>Porterbrook’s business is characterised by a relatively low volume of high value transactions and its systems and controls are set accordingly. The key tax risks relate to Corporation Tax, Income Tax and VAT; the calculation of payroll and the associated taxes are outsourced to a local bureau.</p>
<p>The Chief Financial Officer, supported by the Finance Department, is responsible for the day to day tax accounting arrangements of the Group. The Chief Financial Officer reports all significant financial matters to the independently chaired Porterbrook Board. Where required, external advice is sought in relation to unusual or complex transactions and this advice is provided to the Board. The Board retains overall responsibility for the Group’s policies and processes for managing financial and operational risks. These arrangements ensure that all decisions related to significant tax risks are subject to review by suitably qualified and experienced staff and are approved in manner consistent with the other risks to which the business is exposed, with the objective that the Group’s UK tax obligations are met.</p>
<p><strong>Group entities covered by this Statement</strong></p>
<p></p><p>Porterbrook Holdings I Limited<br>
Porterbrook Holdings II Limited<br>
Porterbrook Investments I Limited<br>
The Porterbrook Partnership<br>
Porterbrook Rail Finance Limited<br>
Porterbrook Leasing Mid Company Limited<br>
Porterbrook Leasing Company Limited<br>
Porterbrook Maintenance Limited<br>
Porterbrook March Leasing (4) Limited<br>
Porterbrook Leasing Asset Company Limited</p><p></p>