Have you provided shares or share options to your staff this year?

If you have awarded shares or share options in your company to your employees, or directors, for the year to 5 April 2015; then you need to file a return to HMRC by 6 July 2015.

Known as Form 42, this is the first year that HMRC have said that it must be filed online. In the past, a paper form was provided and posted to companies who had made previous filings.

You will also have additional filing requirements if you have HMRC approved share option schemes (i.e. Enterprise Management Incentive “EMI”, Company Share Option Plan “CSOP”, Save-As-You- Earn “SAYE” and Share Incentive Plan “SIP”).

Although 6 July seems like plenty of time, in order to file online you need to have registered your company with HMRC online services for Employment Related Securities (ERS), which can be found under PAYE for Employers. Note; HMRC do not do this automatically and neither can your tax agent do it on your behalf. Additionally, if you would like your tax agent to complete and file your Form 42 on your behalf then authorisation of an agent takes at least three weeks.

There have been some teething problems with registrations so it is best to do this sooner rather than later.

Potential penalties that can be raised from failure to file on time include:

  • Up to £700 for a late return, plus £10 per day if the return remains outstanding after nine months
  • £5,000 for a material inaccuracy in a return which is not immediately addressed
    Additionally, HMRC approved share option schemes can lose their tax advantages if the annual returns are not filed on time.

Don’t get caught out! HMRC should have sent out letters to companies that have filed these in the past but you may not have realised the letter’s importance or it could be the first year that this is applicable to you.

If you think that this may apply to you or you need help with your filing then please contact Angela Mikola or Adrian Widdowson on 01094 464100 or enquiry@garbutt-elliott.co.uk.