This briefing discusses HMRC’s upcoming 6 July deadline for certain filings relating to share schemes and other employment-related securities. HMRC will not issue reminders for these reporting requirements.
Even if there has been no activity for the 2016/17 tax year in relation to a registered scheme, companies must submit a nil return to avoid the imposition of penalties for failing to file.
If you require any further assistance in connection with the upcoming deadline, please do not hesitate to get in touch with your usual Stevens & Bolton contact or any member of our Corporate Tax team.
What are the reporting requirements?
The following need to be filed on or before 6 July:
- notice of any new share incentive plan (“SIP”), save as you earn (“SAYE”) option scheme or company share option plan (“CSOP”) which was implemented during the 2016/17 tax year, including a declaration that the requirements of the relevant legislation have been met;
- an annual return or nil return for each registered share scheme or other arrangement; and
- an annual return for each unregistered share scheme or other arrangement involving any “reportable event” in the 2016/17 tax year.
“Reportable events” are defined under statute and include (amongst other things):
- the acquisition, or sale at more than market value, of employment-related securities; and
- the grant, exercise, cancellation, lapse or release of non-tax advantaged options.
Therefore, the award of shares or options to UK-resident employees or directors by reason of their employment will need to be reported, even where such award is not made under a formal scheme.
If you have granted enterprise management incentive (“EMI”) options during the 2016/17 tax year, the scheme and grant of any options pursuant to it ought to have been reported in-year within the normal EMI reporting rules (i.e., notification of options within 92 days of grant).
What information needs to be provided?
HMRC has provided templates for each of the various annual returns that may need to be filed, the format of which must be followed (see https://www.gov.uk/guidance/tell-hmrc-about-your-employment-related-securities#templates-technical-notes-and-guidance-for-attachments).
The information that needs to be provided includes, where relevant, details of any:
- exercise, release, lapse, cancellation, rollover or adjustment of EMI options;
- grant, exercise, cancellation, lapse or release of CSOP or SAYE options;
- award of SIP shares;
- SIP shares which cease to be subject to the relevant scheme; and
- “reportable events” arising under a non-tax-advantaged scheme or other arrangement, pursuant to the employment-related securities rules.
If there has been any amendment to:
- the key features of any SIP, CSOP or SAYE scheme or any SIP trust; or
- any SAYE or CSOP option following a variation of share capital,
a declaration that such amendment has not caused the relevant requirements of the legislation to cease to be met must be filed alongside the annual return.
Mistakes must be corrected without delay.
Who can make the filing?
The company operating the scheme or arrangement does not necessarily need to make the filing - any company in the same group as that company may do so. The registering company will need to have an active PAYE reference.
Companies’ agents cannot register new schemes of any sort, nor provide the relevant legislation-compliance declarations for any SIP, CSOP or SAYE option scheme – these are the responsibility of the companies themselves. Companies are permitted to appoint agents to file annual returns on their behalf. However, it may take up to two weeks for an agent authorisation code to be issued.
Before submission of the relevant filing, the company secretary or the person acting as secretary of the relevant company must confirm that the information submitted is correct and complete.
Are there any other considerations?
If a filing needs to be made in relation to an unregistered scheme or other arrangement, that scheme or arrangement will first need to be registered under HMRC’s ERS online filing system. This is an adjunct to HMRC’s PAYE online services, so companies that are already registered for PAYE online can register for ERS online at any time. Companies not registered for PAYE online will need to register. However, it may take up to two weeks from registration for receipt of the requisite activation code. Once registered, we understand that it may take up to a week for the unique scheme reference number to be provided, which is needed to make the relevant filings.
Companies can choose whether non-tax-advantaged schemes are registered and reported on separately or together.
What are the consequences of missing the deadline?
Failure to register a new SIP, SAYE option or CSOP by the deadline will affect the tax-advantaged status of the relevant scheme.
There is an automatic initial penalty of £100 for a late return, with further automatic penalties of £300 each if returns remain outstanding more than three or six months after the deadline. A further penalty of £10 a day may be imposed by HMRC if a return remains outstanding after nine months.
As mentioned, failure to file a nil return will still invoke the relevant penalties.
HMRC can impose a penalty of up to £5,000 for material inaccuracy in a return which is not amended without delay.