Employee Share Plan Returns - do you need help this year?

Posted by RM2 at 14:39 on 17 Feb 2020

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What is an Employee Share Plan Return?

All employee share schemes need to be registered with HMRC. An employee share plan return is the annual process of notifying HMRC of awards granted, lapsed & exercised and confirming if any alterations have been made to key feature of a share plan. Even if there has been no activity relating to your share plan, you will need to send in a nil return to avoid a fine.

Why does HMRC need this information?

For two reasons. Firstly, HMRC are responsible for overseeing tax advantaged employee share plans, such as the Enterprise Management Incentive (EMI), the Company Share Option Plan (CSOP) or the Share Incentive Plan (SIP). These cost the taxpayer several hundred million pounds in tax relief. HMRC is accountable to parliament for this.

Secondly, employee share plans have in the past been used by some companies to avoid tax. HMRC gathers information on employee shares schemes to spot possible tax avoidance.

How does HMRC gather this information?

Since 2014, HMRC have required the information to be uploaded to an online system called ERS (Employment Related Securities), the term used in the taxes legislation.

We can submit this information on behalf of our clients using our Agent status, so we are very familiar with the system.

What are the penalties for failing to provide a share plan return?

The first penalty is £100 for failing to meet the 6th July deadline, then additional automatic penalties of £300 will be charged if the return is still outstanding on 6th October, and a further £300 if it’s still outstanding 6 months after that date. If a return is still outstanding 9 months after the 6th July, daily penalties of £10 a day may be charged.

How can we help?

We are one of the few share schemes practices who can both design and implement your share plan, and also deal with your share plan annual returns for you. We are often approached to undertake a health check of a share scheme and the majority of our clients then choose to engage us to administer their schemes going forward, which includes filing of the annual return. But don’t take our word for it – have a look at what our clients say.

If you would like an initial consultation for a health check or to look into how we can help with your share plan annual returns get in contact on 0208 949 5522 or email operations@rm2.co.uk