HMRC compliance reviews on share schemes
HMRC carry out compliance reviews on the tax advantaged share schemes. The tax advantaged schemes are Save As You Earn (SAYE), Enterprise Management Incentives (EMI), Share Incentive Plan (SIP) and Company Share Option Plan (CSOP).
The purpose of the checks is to ensure that the arrangements meet the legislative requirements of each arrangement. An arrangement that has been incorrectly established or administered can result in a loss of its tax advantaged status.
To begin the process HMRC will issue an information notice detailing what documents they want to see. Below are some tips on how to keep on top of your records and respond to a compliance check should you need to.
- The executed documents along with any supplementary documents such as rules or explanatory documents should be kept in a safe place. The participants should retain a copy of their signed documents and any certificates that have been issued to them. In the event of an exercise of options, sale of shares from a SIP etc supporting documents should be kept proving that any taxes due have been paid.
- A detailed record of the share plan holding should be maintained and updated when changes are made. This is also needed to make the annual return filing.
- On registration of the arrangement you will be given an acknowledgement reference confirming completion of the registration. Shortly after this you will also be given a scheme reference. Please ensure these details are kept securely. We would usually suggest a screenshot is kept.
- When notifying HMRC of an award of EMI options you will need to keep a detailed record of the information submitted. The current system doesn’t provide a receipt once the notification is complete, and again we suggest that screenshots of each and every screen in the process are taken. HMRC are unlikely to be able to trace a registration without an acknowledgment reference so you need to keep proof that the options were registered within 92 days of the date of grant.
- Annual Returns must be filed by 6th July following the tax year which it relates to. Once an annual return has been filed a receipt is issued. This receipt should be kept with any file uploads form part of the filing. These records should be retained for each and every years’ filing. By filing an annual return you are declaring it meets the legislative requirements.
Keep your HMRC login details safe. If you lose them HMRC issue new codes by post which can often be lost that then delay filings, resulting in penalties.
If you require assistance in establishing a share plan or have a share scheme that requires administration, please contact us on 0208 949 5522 or email firstname.lastname@example.org.