The deadline for the annual reporting requirements in respect of employment related securities acquired by UK resident employees is fast approaching. If you have not yet made your return for the 2010/2011 period you should act now.
The deadline for receipt of the returns by HM Revenue & Customs ("HMRC") is 6 July 2011 for any "reportable event" taking place between 6 April 2010 and 5 April 2011.
Reportable Events
Reportable events include events relating to options (for example the grant, assignment, release or cancellation of any options), or the acquisition of shares and securities (including the acquisition of an interest in shares and securities). The disposal of shares and securities may also need to be reported.
Reporting Obligation
The obligation to report applies to both the employing company and any parent company whose shares are under option or have been acquired.
Failure to Report
If the appropriate returns are not received by HMRC by 6 July 2011 both the employing company and any parent company whose shares are under option may be liable to a fine. The initial fine is £300 followed by a daily penalty of up to £60 for each reportable event. Failure to report grants made to 5 employees could result in a potential penalty of £3,000 for each company with a responsibility to make the return.
Reporting
Details of reportable events should be returned on a Form 42. Click for HMRC guidance notes.
Nil Returns
Even if there have been no reportable events for the 12 month period, if a return has been made in previous years, HM Revenue & Customs must be informed of the fact that there is nothing to report for the year by completing the appropriate form as a 'Nil Return'.
EMI Options
The reporting process for EMI Options should not be made on a Form 42, they must instead be reported on an EMI 40 by 6 July 2011.
Other Approved Plans
There are separate specific forms for the various other types of incentive schemes including: Share Incentive Plans, Company Share Option Plans and Sharesave Plans.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.