What has to be reported?
Following the end of another tax year, it is now time for companies to prepare annual returns to H.M. Revenue & Customs (HMRC) in respect of:
- any share options granted or exercised under an HMRC approved share option plan such as a Company Share Option Plan, a Save As You Earn Plan, a Share Incentive Plan or an Enterprise Management Incentive Plan during the 2011/12 tax year
- any share options granted or exercised under an unapproved share option plan during the 2011/12 tax year
- any shares which, broadly speaking, their employees and directors (including non-executive directors) may have acquired or sold or obtained an interest in during the 2011/12 tax year (known as "employment related securities")
- the assignment or release of any taxable securities option for consideration
- the falling-away of any restrictions applying to restricted securities e.g. where shares were issued to employees subject to a forfeiture provision which lapses after a specified time period
Please note that this list of "reportable events" is not exhaustive.
What companies have to prepare these forms?
All companies (including fully listed companies) which have events to report have to lodge these forms even if they have not received a "Notice to File" from HMRC. If a company has received such a notice then they must lodge a return. If a company has lodged a return for a previous tax year, but has no events to report for 2011/2012 tax year, it is still required to file a nil return.
There is an exception for fully listed companies in relation to shares acquired by their employees in the open market. Note that this exception does not apply to companies listed on AIM. This can cause difficulties for such companies as the employer may not necessarily be aware of acquisitions made by employees in the marketplace.
What are the appropriate forms and where do I find them?
The forms are as follows:
Form 42 is complex as the obligation to report can extend to shares which might have been acquired by a related person e.g. by an employee's spouse. It also requires details of any "chargeable events" for employment related securities purposes. This can include the lifting of restrictions on shares or any post-acquisition benefit arising to employees.
If you are not sure if you are required to complete a Form 42, click here to refer to the guidance notes on the HMRC website.
What is the filing deadline?
All the forms must be filed with HMRC in paper format on or before 6 July 2012. Note that online filing has been withdrawn from 1 April 2010.
What happens if no form is lodged or it is lodged late?
Penalties can be applied by the HMRC, and as these can relate to each event not reported they can be substantial.
If you have any queries in relation to your annual filing obligations or would like any assistance in preparing the relevant forms we would be happy to help. Please contact:
Head of Tax
0141 271 5778
0141 271 5773
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This briefing is written as a general guide only. It is not intended to contain definitive legal advice which should be sought as appropriate in relation to any particular matter.