Please can we keep it simple for the Enterprise Management Incentive!?!
One of RM2’s mantras is “Keep it Simple” so we’re always keeping a weather eye on the work of the Office of Tax Simplification (OTS).
Their most recent reports have focused on capital gains tax simplification, including a section in their second report suggesting simplifications for the administration of the Enterprise Investment Scheme (EIS). While the EIS is not an employee share plan, those who do not have a geekish interest in such matters may not be aware that the Enterprise Management Incentive (EMI) legislation – the “gold medal standard” employee share plan – and the EIS legislation actually have a number of areas of great similarity.
This is no great surprise given that they were both written into law in their original forms at similar time (at the beginning of this century). We do not intend to go into the full intricacies of the similarities for the purposes of this blog (for obvious dullness reasons). Suffice to say that both contain very similar complex provisions around “control” and group structure as well as “trading activities” amongst other things.
In short, we would implore the Government to adopt the eminently sensible suggestion of the Office of Tax Simplification to make EIS easier to administer AND to adopt a similar strategy in relation to EMI. There were good reasons why these two schemes were introduced by the Government of the day back in the early 2000’s and good reasons now why both these schemes should be simplified and made easier to administer in the context of emerging strongly from the coronavirus pandemic.