HMRC F0rm 42 – Employment-related securities – covers most situation where you issue shares to employees or directors, however, you may not need to complete the form in some circumstances:
- On Company Formation
- Allotment of shares prior to starting to trade
- Shares issued to Directors before the company starts to trade
- Transfers of shares in the normal course of the domestic, family or personal relationships
- Flat Management Companies
- Members’ clubs (formed as companies)
- Share for share exchange
- Rights Issues
- Bonus Issues
- Scrip Dividends
- Dividend reinvestment plans (DRIPs)
- Shares acquired independently by employees
Examples of what you must report:
- The gift or purchase of shares by employees or directors.
- The grant or exercise of options granted to employees or directors.
- Anything that changes the value of the shares held by employees or directors.
- The sale of employees’ or directors’ shares for more than their market value.
- Cash cancellation payments to employees or directors.
Penalties
Penalties are not imposed automatically, the company is warned of their failure to make a report on a minimum of two occasions before the case is referred to the tribunal. The penalties can be £300 per responsible person and £60 per day outstanding.
Here is a link to the 2012 Form 42 http://www.hmrc.gov.uk/shareschemes/form42-2012.pdf
steve@bicknells.net
