During the unprecedented time we find ourselves in as a result of the COVID-19 pandemic, we appreciate that the administration of your employee share scheme may not be at the top of your list of priorities. However, the obligation remains for companies who operate such a scheme to file their annual returns for the 2019/2020 tax year before the deadline of 6 July 2020. And the clock is ticking…
HMRC does not send out any filing reminders and there are automatic penalties for late-compliance.
HMRC requires companies who have registered an employee share scheme to file an annual return for each registered scheme on or before 6 July following the close of each tax year. This includes both tax-advantaged share schemes such as EMIs, CSOPs, SIPs and SAYE and any non tax-advantaged or ‘unapproved’ schemes.
We recommend filing your online annual return as soon as possible to avoid any financial penalties being incurred. To date, HMRC has not provided a COVID-19 related extension to the deadline for filing annual returns or concessions to the issue of late filing penalties.
The submission of annual returns can be carried out by the company directly or by any agents authorised to act on your behalf. Birketts can file these annual returns on your behalf, so if this service would be of interest to you during this time please be in touch.
What needs to be done?
Annual returns should be filed using HMRC’s Employment Related Securities (ERS) Online Service which can be accessed via your Employer’s PAYE online account.
Each employee share scheme requires a separate annual return.
All ‘reportable events’ that have taken place in the last tax year must be notified to HMRC on the annual return. This includes the grant of new options; exercise of existing options; release, lapse or cancellation of options i.e. if an employee has ceased employment with the company; a rollover or adjustment of options; acquisition of shares; changes to the restrictions on shares or other disqualifying events. If you are in any doubt as to whether to report a particular event, please feel free to contact us.
If there has been no any activity in the previous tax year or there are no outstanding options under a registered scheme, you will still be required to file a ‘nil return’ against the scheme. Failure to do so would result in a penalty.
If there are no outstanding options and no further options are likely to be granted under the scheme, the company should take steps to close the scheme to avoid the requirement to file an annual return for each year it is inactive.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at April 2020.