Scholastic UK Group Tax Strategy

This paper sets out the tax strategy of the Scholastic UK Group (the “UK Group”), and in making this strategy available the UK Group is fulfilling its responsibilities under Schedule 19 of the Finance Act 2016.

This tax strategy applies to all UK taxes applicable to the UK Group and the document is owned by the Board of Directors of the Scholastic UK Group (“the Board”). It will be reviewed annually, updated as appropriate and approved by the Board.

The Board is responsible for setting and monitoring the strategy. The finance team of the UK Group are accountable to the Board for the implementation of the tax strategy and the management of tax and related risk.

The UK Group’s Tax Strategy is guided by the wider Scholastic Group’s vision “to Open a World of Possible for children across the globe” and by our mission “To encourage the intellectual and personal growth of all children, beginning with literacy”. Our stated values reflect our commitment to our customers, our people, our corporate and social responsibility and to our integrity.

Our tax strategy reflects our status as a subsidiary of a listed Group which requires strong governance and consideration of our reputation, while delivering returns to our shareholders.

How the UK Group manages its tax risks

The UK Group’s on-going approach to UK tax risk management and governance is based on the principles of reasonable care and materiality. The UK Group maintains on-going application of tax governance with strong internal controls in order to substantially reduce tax risk to materially acceptable levels. As part of this governance, the UK Group has identified tax risks, which are maintained on risk registers, and their materiality is assessed based on a corporate risk matrix which records the potential impact on the Group if the tax risk crystallises and the relative likelihood of it crystallising.

The tax risk registers are continually reviewed to ensure the risks are adequately managed and where necessary raised up through the appropriate levels of management and ultimately to the Board, and if necessary engagement with HM Revenue & Customs (HMRC).

The UK Group’s attitude to tax planning.

The UK Group has a low-risk appetite towards tax planning and therefore will not engage in artificial transactions with the sole purpose of reducing UK tax. However, the UK Group will consider undertaking a transaction in a way that gives rise to UK tax efficiencies providing this is aligned to the UK Group’s commercial objectives as detailed above and complies with the associated UK tax legislation. The UK Group will not engage in tax efficiencies if the underlying commercial objectives do not support the position, or if the arrangements impact upon the UK Group’s reputation, brand, corporate and social responsibilities, or future working relationships with HMRC.

The UK Group and its tax risks The UK Group’s strategic aim is to achieve a low UK tax risk rating with HMRC. The UK Group seeks to achieve this aim through: (a) submission of all UK tax returns on a timely basis, including sufficient detail to enable HMRC to form an accurate view of the affairs of the company filing the return with an adequate supporting audit trail and sign-off process; (b) paying the appropriate amount of tax at the right time. Where this view may differ to the position taken by HMRC, the UK Group aims to be transparent about the filing position it has taken; (c) maintain tax accounting arrangements which are robust and accurate; (d) ensuring that the Scholastic UK Group departments who are involved in the UK Group’s tax processes are both adequately resourced, supported and that key personnel are retained in order to manage tax compliance issues on a timely basis; and (e) ensure all tax filing positions are supported with appropriate documentary evidence; (f) obtaining and following advice from trusted third party providers where knowledge and experience is not readily available internally. All third party advisers are made aware of the UK Group’s Tax Strategy and attitude towards tax risk through continuing working relationships and regular meetings to update them on the business activities of the UK Group; (g) ensuring our advisors have a full view of the wider Scholastic Group’s activities to ensure an aligned approach to UK tax compliance.

Working with HMRC The UK Group will comply with all relevant legal disclosure and approval requirements and all information will be clearly presented to HMRC as appropriate. In its dealings with HMRC, the UK Group will act in an open, honest and transparent manner. The UK Group’s strategic aim is to avoid unnecessary disputes with HMRC and thus minimise tax risk, and we will seek to achieve this through: (a) where appropriate, seeking pre-transaction clearances from HMRC; and (b) making the tax compliance procedures and controls available for review by HMRC upon request.

This Tax Strategy document is communicated to all the relevant stakeholders within the UK Group, from the Senior Management team who are making regular commercial decisions to those individuals who are involved in the daily tax processes/procedures that we operate, so that it is firmly embedded in the culture that we adopt. This Tax Strategy will be subject to continuous review by these stakeholders to ensure that the UK Group is adhering to its strategic aims and objectives and made available to the Board as part of its annual review.

Issue Date: 20 March 2018 – relating to Financial Year Ending 31 May 2018