What should I be mindful of when granting options?

Posted by RM2 at 10:49 on 18 Jun 2020

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The Upper Tribunal (“UT”) has allowed HM Revenue & Customs (“HMRC”) to appeal against the decision of the First-tier Tribunal (“FTT”) Vermilion Holdings Ltd v HMRC [2019] UKFTT 230 (TC) (8 April 2019) that an option was not granted to a director by reason of their office and as such should not have been subject to income tax on exercise.

HMRC took the view that the share option was caught by the deeming provision and subject to income tax as Mr Noble was an officer at the time the option was granted to him, irrespective of its purpose. Mr Noble’s legal counsel argued that the option was granted in relation to the surrender of an option awarded for consultancy services.

Where companies are granting options and issuing shares to officeholders and employees they must always be mindful of the tax implications and the wide ranging tax avoidance legislation.

If you wish to discuss share incentives, and the requirement to file annual share scheme returns, please do email enquiries@rm2.co.uk.