Originally published Summer 2004
Form 42 is causing alarm for many finance directors and company secretaries.
What is Form 42? For a number of years, the Inland Revenue has been building up its own files on employee shareholdings in both public and private companies. The motive is to monitor whether income tax rather than capital gains tax might be charged on any gains made on the disposal of the shares.
Form 42 puts these informal arrangements on a statutory basis. The catch is that the Inland Revenue requires companies to file details relating to employment- related securities even if there is no likely income tax charge. Also by defining employmentrelated securities by reference to past and prospective employments, disclosure is far wider than might be expected.
If you were sent a Form 42 by the Revenue, the dead line for filing was 6 July 2004. If you have not been sent a Form and your company has had any share dealings with employees since 6 April 2003, then you need to file Form 42 on your own initiative by 30 November 2004.
The penalty for failing to file Form 42 is £300 followed by a further penalty of £60 per day for each extra day of late filing. Coincidentally, this is the same amount as the standard fine for a motorist caught by a speed camera and, as with speed cameras, some commentators have suggested that the real purpose of this penalty is to raise money rather than to encourage compliance.
© RadcliffesLeBrasseur
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.
