There are some important deadlines looming for companies which operate share schemes. In brief:
Online filing
From 6 April 2007, companies have been able to file certain share scheme returns online. To use this facility, companies must be registered for the PAYE Online – Internet Service.
The important point to note is that HMRC no longer issues paper returns to companies. Instead, as it did last year, it will issue notices to file share scheme returns to those companies which are known to it. Unapproved arrangements will still have to be reported even where HMRC has not issued a notice to file.
Companies are encouraged to file returns online but may currently continue to file paper returns if they wish to do so. The deadline for submitting returns is the same whether the return is filed online or by paper. Companies can obtain paper copies of the annual returns by printing a copy from HMRC's website.
Approved schemes
Each type of approved scheme has its own bespoke return: Form 34 (ShareSave or SAYE), Form 35 (company share option scheme or CSOP), Form 39 (Share Incentive Plan or SIP) and Form 40 (Enterprise Management Incentives or EMI).
The forms have been simplified this year so where HMRC has already been notified of changes or other events (such as adjustments to options, amendments to scheme rules or exchanges of options), this information does not have to be given again.
Each return can be accessed online from HMRC’s website - Click here to view
Forms 34, 35 and/or 39 may be submitted online. You need to ensure that Forms 34, 35 and/or 39 are submitted to HMRC online or at the following address by 6 July 2008:
Employee Shares and Securities Unit
Room G52
100 Parliament Street
London
SW1A 2BQ
Form EMI 40 for reporting EMI options will continue to be issued by (and should be returned to) the Small Company Enterprise Centre. Online filing is not available for Form 40.
This form has also been simplified since last year so details of EMI options granted are no longer required to be reported again (they should have been notified to HMRC within 92 days of grant). It is also possible to declare a nil return if there has been no activity in the year.
Reportable events and unapproved schemes
In relation to unapproved arrangements including share option schemes and share acquisitions by employees and directors (including non-executives), an employer is required to provide HMRC with written details of any "reportable events" which occurred during the tax year ending 5 April 2008. The appropriate form to use is Form 42 available online from HMRC’s website - Click here to view
The scope of the term reportable event is very wide and broadly includes any event involving securities or share options which might give rise to an income tax charge under the Income Tax (Earnings and Pensions) Act 2003. In particular, reportable events include the acquisition or disposal of shares or securities, the lifting or variation of share rights, the conversion of shares and the grant, exercise, assignment or release of options. HMRC provides guidance on completing Form 42 which covers the main areas of difficulty - Click here to view
Unlike approved schemes, HMRC does not notify companies of their obligation to file the return.
If your company does not have any reportable events to include on Form 42 in respect of the tax year ending 5 April 2008 but shares have been made available to employees and directors in the past, you will still have to submit a “nil return”.
Form 42 may be submitted online. You need to ensure that Form 42 is submitted to HMRC online or at the following address by 6 July 2008:
Employee Shares and Securities Unit
Room G52
100 Parliament Street
London
SW1A 2BQ
Failure to submit a return by the above deadlines (or filing an incomplete or inaccurate return) may result in fines and penalties.
If you require further details please contact:
