Companies across the UK can heave a sigh of relief now that the extended 4th of August deadline for the e-filing of UK employee share plans has passed.
HM Revenue & Customs (“HMRC”) introduced their new online filing system this year, replacing previous paper form returns.
The responsibility of Companies to correctly file their returns online cannot be understated! Not only were the returns complex and time consuming, they had to overcome technical difficulties encountered with the new online administration system and face a zero tolerance policy in relation to errors and omissions.
The new rules governing registration and reporting were introduced by HM Revenue & Customs (HMRC) for the 2014/15 tax year and onwards.
In rolling out the new online system, HMRC made clear that it would enforce strict deadlines to save as you earn schemes (SAYE), share incentive plans (Sips), enterprise management incentive schemes (EMI) and company share option plans (CSOPs), which all have tax advantages.
Furthermore, if an existing share scheme plan was not registered, then all awards or grants made in 2014/15 would lose their qualifying status and become subject to income tax on exercise of options.
Read commentaries on the move to online e-filing from UK industry experts:
‘Now that the first fully online scheme returns season is finally over, companies and advisors will need to take stock of their experiences this year and get some early preparation in for next year. Ifs ProShare has maintained an ongoing dialogue with HMRC throughout the season and has acted as a channel for member queries and HMRC information in order to try to ease some of the issues experienced. We are meeting with HMRC to review the season in its entirety in September and would welcome constructive feedback on this year’s experience and what could be improved for next year’
– Gabbi Stopp – Head of Employee Share Ownership, ifs ProShare – The not-for-profit organisation which represents the UK employee share plan community with the goal to further improve the fiscal, legal and regulatory environment for employee share plans.
Ian Murphie, Director of Share Plan Partners Ltd, outlines below what is entailed in processing the return online:
What are the timelines for annual returns?
In the UK, employing companies are under a statutory obligation to file with HM Revenue & Customs (“HMRC”) an annual return detailing any type of security a UK resident employee has acquired by reason of their employment (“employment related securities”). The deadline for filing is the 6th July each year and relates to the tax year ended 5th April immediately preceding. Failure to file an annual return can lead to financial penalties.
What is included in the annual return?
The term “securities” is widely drawn and includes more than just shares and options. Alternative finance investment bonds (including certain Islamic finance “Sukuk” arrangements) are also included, as are contracts for difference, units in collective investment schemes, warrants, loan stock and so on.
Replacing paper returns
In the past the method of filing used to be done using paper returns, with all HMRC tax advantaged plans being reported on a return relevant to the scheme in question. Any non-tax advantaged arrangement fell to be reported under an umbrella return called a form 42.
Following a move by HMRC to streamline services, all returns for the tax year ended 5th April 2015 now need to be made online. The move has, however, not been without difficulties and first round jitters led to the online filing deadline being extended to 4th August 2015 without risk of penalties.
So what do employer companies need to do to file their returns online?
- Register for HMRC online services – It can take up to 7 days to receive login details
- Register each employment related securities scheme or arrangement in respect of which HMRC will allocate a unique scheme reference number. Failure to register a tax-advantaged scheme will lead to its tax advantages being lost
- The company secretary or employer (on behalf of the company secretary) must self-certify any tax advantaged scheme using the ERS Online Service (non-tax advantaged schemes or arrangements do not need to be registered until there is a reportable event)
- Supply HMRC with an online return for each registered employment related securities scheme or arrangement by 6 July following the end of the tax year, to be accompanied by an attachment in respect of any reportable events using the templates provided by HMRC.
Ian’s tips for a smooth online return!
- Register early for group schemes
- Register the schemes or arrangements once only and under only one of the group’s UK employer company PAYE online services portal
- Be aware that all information relating to reportable events must be uploaded in .ods format
- Relax, all things new become second nature!
For more information on e-filing please visit the HMRC website.
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