Companies operating unapproved share schemes are required to submit a Form 42 to HMRC informing of any reportable events relating to its own shares. There is also the requirement to submit a Form 42 to HMRC if one has been issued, even if there is nothing to report.
What needs reporting on the Form 42?
The following is a list of the main events which must be reported:
- Shares issued to employees during the year by reason of their employment
- Grant or exercise of options granted to either directors or employees
- The gift or purchase of shares by directors or employees
- Shares sold at a price exceeding market value
- Restricted shares sold to a non-associated person
- Previously restricted shares where the restriction has been lifted during the tax year
- Anything which has changed the value of the shares held
The above list is not exhaustive and further reportable events are listed here, together with the form.
The Form 42 is due by 6 July 2013 and a penalty regime is in place for late filings. This could mean £300 per reportable ‘event’ not reported plus potentially £60 per day that the Form is outstanding.
If the company has no reportable events AND has not been issued with a notice to submit a Form 42, then there is no requirement to submit a Form 42.
Events which are not reportable include:
- Newly incorporated companies (including the allotment of further shares where allotted prior to the commencement of trading or transfer of assets to the company, and subject to certain conditions)
- Company formation agents – shares acquired by the company formation agent (initial subscriber shares) on incorporation
- Shares acquired independently by employees
- Members’ Clubs (formed as companies)
- Share for share exchange, rights issues, bonus issues, scrip dividends and dividend reinvestment plans
- HMRC Approved Schemes as follows:
- Save As You Earn schemes – instead reportable on Form 34
- Company Share Option Plans (CSOPs) – reportable on Form 35
- Share Incentive Plans (SIPs) – reportable on Form 39
- Enterprise Management Incentives (EMIs) – for options granted under EMI up to £100,000, report on Form 40; for options granted in excess of £100,000, report excess on Form 42.
To discuss your company’s reporting obligations with respect to share schemes and reportable events, Curo’s head of tax, Julia Whelan can advise with clarity.
Curo Chartered Accountants
Curo Chartered Accountants is a Bromsgrove-based practice of qualified chartered accountants and chartered tax advisors