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Register your arrangement with HMRC to avoid penalties

If you are operating a non tax-advantaged share scheme or making awards of non tax-advantaged shares or securities (an Unapproved Plan), you may already be aware that the deadline to register your arrangement with HMRC is 6 July 2015. Here’s our short guide on why and how to register.

Why must I register my Unapproved Plan with HMRC?

HMRC is attempting to simplify compliance administration by moving from paper to online filing. To facilitate this, UK tax legislation now requires registration of share plans online.

If you do not register your existing Unapproved Plan with HMRC then you will not be able to comply with new statutory requirements requiring you to submit annual returns online for the tax year 2014/15 onwards.

How to register your Unapproved Plan with HMRC

We are unable to register the Unapproved Plan on your behalf; this is something that the Company must do.

  • To register the Unapproved Plan you will need to be registered to use HMRC Online Services and have access to PAYE for employers. Once you have signed up to this HMRC service, it can take up to seven days to receive your login details so it is better to register sooner rather than later.
  • You can use any active or live PAYE reference number to register Unapproved Plans. If you would like to keep your Unapproved Plan information separately to the Company's PAYE information then you will need to register the Unapproved Plan under a different PAYE reference. You will need to set up a separate organisational account to be able to do this.
  • You only need to register the Unapproved Plan once. Once it is registered, it will be allocated a unique scheme reference number.

What needs to be reported to HMRC?

Form 42 reportable events cover most activity relating to employee shares and securities including, but not limited to, the following:

  • grants and exercises of options;
  • awards of shares;
  • vesting of restricted shares (ie lifting of restrictions);
  • variations of restrictions over shares; and
  • consideration received for assigning or releasing options.

How to complete annual reporting requirements online

  • Once you have registered your Unapproved Plan, you can authorise us to act as your agent to submit the annual return on your behalf. We will need your PAYE reference and office reference in order to be set up as agent.
  • Alternatively, using your unique scheme reference number, you can log into HMRC Online Services and complete your annual return. To do so effectively, you will need the type of information listed in the paragraph above.

If an annual return is not received by 6 July 2015, automatic penalties will apply.

We would advise that you register your existing Unapproved Plan(s) well before 6 July 2015 because we have found that registration takes longer than anticipated and as with anything new, there is a learning curve for all involved.

Please note that online registration with HMRC applies to other employment related securities, not just Unapproved Plans. For example, HMRC will also expect you to register any existing EMI Plans, Share Incentive Plans, Company Share Option Plans and other employment related securities with HMRC in advance of the 6 July 2015 deadline.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2015. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.
TLT LLP is a limited liability partnership registered in England & Wales number OC 308658 whose registered office is at One Redcliff Street, Bristol BS1 6TP England. A list of members (all of whom are solicitors or lawyers) can be inspected by visiting the People section of this website. TLT LLP is authorised and regulated by the Solicitors Regulation Authority under number 406297.

by Lucy Kirk

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