The deadline of 6 July 2015 for online registration of employee share schemes, and for filing annual returns for 2014/15, is approaching fast. This Briefing will help to navigate you through the new online procedures.
Registration and self-certification
1. You must register and self-certify schemes online by 6 July. Register your schemes at HMRC’s Employment Related Securities (ERS) online service on the “PAYE for Employers” section of HMRC Online Services. To do this, you need first to be registered to use HMRC Online Services. See HMRC guidance on the registration of schemes, and further guidance in Employment-Related Securities Bulletins 13-17.
When registering a Company Share Option Plan (CSOP), Share Incentive Plan (SIP) or Save As You Earn (SAYE) plan you must make a ‘declaration of compliance’ with the statutory requirements which apply (see HMRC guidance).
2. Some types of schemes must be registered individually
- Each CSOP, SIP or SAYE plan must be registered separately with a different name.
- Enterprise Management Incentives (EMI) schemes may be registered separately but a single registration will suffice.
- Non-tax-advantaged schemes may be registered separately but a single registration will suffice.
3. You cannot delegate registration to your tax agent. Although a company's tax agent may file annual share scheme returns, agents cannot register schemes or carry out the self-certification of schemes; the company which established the scheme must do this.
4. Don’t leave it until the last minute. Registering for, and accessing, the HMRC’s Online Service can take up to two weeks. And once a scheme has been notified, it can take several days for the unique reference number to reach you.
5. You’ll need the new scheme reference number to make your annual return. The unique reference number HMRC will give you is needed to submit annual returns. Previous reference numbers no longer apply.
CSOPs, SIPs and SAYE plans: what happens if you miss the deadline?
If a company fails to register and self-certify by 6 July 2015 a scheme which was an approved CSOP, SIP or SAYE plan immediately prior to 6 April 2014:
- Awards granted on or after 6 April 2014 will not be tax-advantaged.
- Outstanding awards granted before 6 April 2014 will:
- In the case of CSOP options, lose their tax advantages;
- In the case of SIP awards or SAYE options, retain favourable tax treatment.
For new schemes, notice of registration must be given to HMRC by 6 July following the end of the tax year in which the first awards are made. If the registration deadline is met, the scheme will be taken to qualify from the date of the declaration (or, if earlier, the date of the awards).
1. Register your EMI scheme with HMRC. Even if no new options have been granted this year, you will need the unique reference number to submit your annual return.
2. Notify HMRC of options. An EMI option must be notified to HMRC by the employer company within 92 days of its grant using HMRC’s online notification service (HMRC guidance). You need to have registered the scheme online first.
3. Be aware of changes to working time declarations. The option holder’s working time declaration is no longer included in a paper-based form EMI1 submitted to HMRC. Instead, when the option is granted, the option holder supplies a declaration (which can be included in the EMI option agreement) to the employer company; the employer company retains the declaration (to support its online notification) and supplies a copy to the option holder within seven days of receipt.
When to register a non-tax-advantaged scheme
There is no need to register these schemes unless an annual return is required. HMRC guidance states that you only need to submit a return following the first tax year in which there is a reportable event. It is not clear whether this statement by HMRC is a valid interpretation of the underlying law or a concession. We recommend that companies register all schemes or arrangements at once and, where necessary, submit nil returns if there have been no reportable events.
An annual return is required, and must be filed by 6 July 2015 for every registered scheme. HMRC will give no notices or reminders, and an automatic penalty will be issued if the return is not received on or before 6 July, following the end of the tax year.
Unless the annual return is a “nil return”, the return must be accompanied by an attachment in the prescribed format giving the required details of any reportable events (see HMRC guidance and ESRBs 17-19).
As part of their online return, companies must submit details of reportable events by uploading an template spreadsheet (ODS format). To make sure that the template spreadsheets are formatted correctly for upload, HMRC have introduced a checking service which companies and agents can access via the “view schemes and arrangements” page within the ERS service.
HMRC powers of enquiry and penalty regimes
HMRC has powers to enquire into CSOPs, SIPs, SAYE plans, EMI options, and non-tax-advantaged schemes or arrangements by giving notice to the company. The enquiry and penalty regime for each type of scheme is different. In the case of CSOPs, SIPs and SAYE plans, where the concept of “self-certification” is a departure from the previous regime of HMRC approval, a distinction is drawn between “serious” breaches and “not so serious” breaches. In the case of a serious breach, a CSOP, SIP or SAYE plan’s tax-advantaged status is withdrawn from a date specified in the enquiry closure notice and the scheme organiser incurs a penalty of up to twice HMRC’s reasonable estimate of the income tax and NICs lost as a result of the mistaken claim to be operating a compliant scheme. In the case of a “not so serious” breach, the penalty will not exceed £5,000 and the irregularity may be remedied within a 90-day period following the issue of the closure notice.