RM2 > RM2 Services & Advice > Share Plan Administration

Share Plan Administration

Employee share schemes are complicated. Badly administered schemes can cost companies dearly in terms of wasted time and effort, and possible penalties and interest from HMRC and Companies House. Such schemes may also lose the confidence of participants.

Often, the schemes that RM2 is asked to administer (as opposed to design) have previously gone wrong. Common problems include:

  • Hidden tax liabilities of which the company is unaware. This could occur following an alteration to share capital or the company structure. Quite often a simple change will result in a share scheme losing all tax benefits.
  • Failure to account properly for PAYE. There are several reasons, one being where a private company is unaware that its shares are "readily convertible assets". The consequences may be irrecoverable double taxation.
  • Incorrect, late or missing scheme returns. Accurate records and detailed knowledge of ITEPA 2003 (as amended) is necessary to complete the forms accurately.

Changes to share capital are often made by private companies when introducing share schemes. All special resolutions must be submitted to Companies House within 15 days together with an amended set of articles and a statement of capital in prescribed form. Auditors should receive copies of all documentation in relation to written resolutions to allow them to reflect the changes in the company's financial statements.

We setup, administer and act as trustee for statutory and discretionary trusts which are utilised alongside some share schemes. The trust should be properly registered and must submit an annual self-assessment return. The administrator should give detailed advice to ensure that unexpected tax charges do not arise under the complex Disguised Remuneration rules introduced in 2011.

Share scheme participants must complete self-assessment returns when Capital Gains Tax (CGT) is payable or Income Tax is due that is not collected via PAYE. The administrator should provide detailed advice and should also support effective staff communication through the provision of a telephone helpline and dedicated website portal. If PAYE is due the administrator should advise the company's payroll function about the timing and amount of any deductions.

The administrator should offer clients regular updates to advise on relevant changes to legislation or HMRC custom and practice. On an exit event the records in relation to your share schemes must be in order to facilitate a smooth transaction. An effect administrator should be on hand to aid this process to allow you to realise the value of the equity within your share scheme.

RM2 has developed proprietary software which manages the administration of every share scheme type on a single platform. The system controls the maintenance of scheme registers, the timely and accurate completion of all statutory returns, provision of reports to auditors, payroll staff and employees and the management of scheme documents.

Contact us on 020 8949 5522 for details of our Share Scheme Health Check service, or for a free adminstration consultation.