Employment Related Securities (ERS)
The online service for the registration and self-certification of employee share schemes, Employment Related Securities (ERS), went live in April 2014.
Many of our clients have successfully registered their schemes and appointed RM2 as their ERS agent.
Here at RM2 we have been working closely with our clients and HMRC to provide feedback on our experiences of using the system as well as those of our clients. Our recent blog provides an introduction to the new system.
The following notes some typical teething problems companies and agents alike might experience:
- To register for an online account the company must have their PAYE and Accounts Office Reference. These references can often get confused with other HMRC references, and the input of the wrong reference will result in the registration process failing. In order for an agent to request to act, they will also need to be given these references otherwise the request will be rejected.
- When an agent successfully requests to act for a company, HMRC send the company an authorisation code which needs to be passed to the agent to complete the process. The code is sent to the address HMRC holds for PAYE purposes. We have found that in some cases, this address is old or incorrect so it is imperative you make sure your HMRC records are correct before you start the process.
- Before an agent can register EMI options on behalf of a company, not only does the company have to register for an account, but they must also inform HMRC of the schemes they operate. An agent cannot do this. If this is not complete the agent will not be able to notify HMRC of EMI options.
- Historically, Notices of Grant were submitted to HMRC, they would respond by letter confirming the options had been registered and provide the company or their agent with a schedule of references for each individual option. The online system means that individual references are no longer provided. In fact, once the information is submitted you only receive an acknowledgement reference for the whole submission and cannot view the data again. We therefore suggest that screenshots and print outs are taken along the way and retained for the company’s records.
- In the event an error is made in the notification of grant, corrections can only be made in the annual return submission for the relevant period. This means HMRC can and will be holding some incorrect data for the tax year until such time the annual return is corrected. Likewise if a company wants to file an early return and close a share scheme record, they are currently unable to do this. The annual returns should be available later this year.
A company, or its agent, has 92 days from the date of option grant to notify HMRC online. The above issues can mean there are delays. HMRC respect that there can be (and has been) teething problems, and have confirmed that failure to notify within 92 days solely due to technical issues experienced with the new system will be considered a ‘reasonable excuse’. Those companies that fall into this category need to contact HMRC via the website.
If you are experiencing problems with ERS and would like RM2 to assist you, please contact Caroline Parker on 020 8949 5522.