Royal Mencap Society Tax Strategy

The Royal Mencap Society is a UK-registered charity (Charity No. 222377) whose mission is to support people with a learning disability - providing care, advice, advocacy , employment , leisure and other support services. 

The purpose of this Tax Strategy is to set out how Mencap manages its tax affairs in a transparent, responsible and prudent manner, consistent with its charitable mission and regulatory obligations. This document is intended to outline our approach to UK taxation relevant to Mencap and any of its subsidiary or trading entities, and to govern how tax-related decisions are taken, how risks are managed, and how compliance is maintained.

The principal taxes to which Mencap is subject (or may be subject) include:

• Payroll taxes ( income tax withholding and National Insurance contributions on staff and other payments)
• VAT (including treatment of exempt / non-profit-making activities, partial exemptions, business/non-business activity, and possible charity reliefs / exemptions)
• Corporation tax / capital gains tax (in respect of any non-charitable trading subsidiary or other taxable activity)
• Taxes related to fundraising, trading, investment income , property, or other activities carried out by the Charity or its subsidiaries

Where relevant, the Charity will also reclaim tax reliefs (for example under the equivalent of Gift Aid, where applicable) on eligible donations or legacy income, in compliance with UK tax laws and regulatory guidance for charities. 

• Oversight and responsibility : The Board of Trustees has ultimate responsibility for the Charity’s overall tax affairs. For day-to-day implementation, responsibility rests with the Chief Financial Officer supported by appropriately qualified in-house finance and/or tax professionals.
• Reporting and escalation: The Chief Financial Officer will report to the trustees (or a dedicated Audit, Finance and Risk Committee) on tax compliance, risk exposures, and any significant developments or uncertainties (e.g., changes in tax law, large transactions, new business/trading proposals) as part of the regular reporting cycle — and on an ad-hoc basis where required.
• Controls, systems and external advice: Mencap will implement appropriate internal controls and processes to identify, evaluate and manage all relevant tax risks. Where transactions are particularly complex, novel, or uncertain, or where significant liability or risk arises, Mencap will — when appropriate — seek independent professional tax advice.
• Risk appetite: The Charity adopts a prudent approach to tax risk. Our aim is to comply fully with UK tax law, avoid aggressive or artificial tax avoidance, and ensure that any tax planning is consistent with both the letter and spirit of relevant legislation and guidance for charities.
• Stakeholder/Regulator engagement: Mencap will maintain a transparent and constructive relationship with relevant tax authorities (e.g., HM Revenue & Customs), and will respond promptly and collaboratively to any enquiries or compliance requests.

• Mencap acknowledges that as a charity, we are entitled to certain tax reliefs and exemptions under UK tax law (for example, in respect of charitable income, Gift Aid on donations, reliefs on VAT or other relevant taxes). Mencap will utilise only those reliefs and incentives to which it is legitimately entitled, and only in the course of activities that further its charitable purposes.
• Any tax planning undertaken will be “reasonable and prudent” — in line with regulatory guidance for charities.
• Mencap will not engage in tax arrangements whose principal purpose is to obtain a tax advantage that undermines our charitable purpose, or could be construed as artificial, aggressive, or contrary to regulatory guidance or the spirit of the law.
• Where Mencap uses trading subsidiaries for non-charitable activities (or any commercial activity), profits may — where appropriate and lawful — be Gift Aided back to the Charity, thereby ensuring that charitable status and tax compliance are preserved.
• Any tax savings resulting from legitimate reliefs or incentives will be reinvested in the Charity’s core charitable activities — rather than being diverted to unrelated purposes.

• Mencap aims for a low tolerance for tax risk. The Charity’s default position will be full compliance and conservative application of reliefs.
• Mencap does not intend to engage in high-risk or aggressive tax strategies.
• Any decision that might significantly increase tax risk (e.g., entering into complex commercial or financial transactions, expanding trading or investment operations, or structuring joint ventures) will require prior consideration by the Chief Financial Officer and approval by the Board (or delegated committee), and - where relevant - independent external professional advice.

• Mencap will interact with HM Revenue & Customs (HMRC) and other relevant tax authorities in an open, transparent and cooperative manner.
• The Charity will respond to HMRC correspondence or requests promptly. Where interpretations of tax law are uncertain, Mencap may seek clarification from HMRC (e.g., via rulings or other formal guidance) or request professional advice.
• Mencap will ensure that all tax compliance obligations are met - including timely submission of any required returns or claims, accurate record-keeping, and adherence to applicable provisions for charities (for example, rules governing Gift Aid, VAT reliefs, charitable exemptions, and any limits or conditions set out in guidance for charities). 

• This Tax Strategy applies to the Royal Mencap Society and any UK-resident subsidiary or trading entity which carries out taxable activities on behalf of the Charity.
• The document will be reviewed annually (or more frequently if significant changes occur - e.g., in tax law, structure, operational activities, or risk profile).
• The approved Tax Strategy will be published on Mencap’s website (or within its annual report ) - accessible to the public free of charge - to ensure transparency and accountability.
• If the Charity considers it does not meet the thresholds for mandatory publication under the UK “large business” rules (e.g., as set out under the HM Revenue & Customs (HMRC) guidance) - Mencap nonetheless adopts this Tax Strategy voluntarily, in the interest of good governance, transparency and public trust.

This Tax Strategy reflects Mencap’s commitment to responsible stewardship of its financial resources, compliance with UK tax law, and transparent governance. By adopting a conservative and principled approach to tax, Mencap seeks to maintain public confidence, safeguard its charitable status, and ensure that funds are used effectively to support people with a learning disability.