Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: miscellaneous charges: employment-related securities penalties

Background

Employment-related securities (ERS) relate to shares or other securities that employees and or directors are given by their employer as a reward or incentive. More information can be found in ERSM20010.

Scheme types are as follows.

  • Company Share Option Plan (CSOP)
  • Enterprise Management Incentives (EMI)
  • Save As You Earn (SAYE)
  • Share Incentive Plan (SIP)

More information on these types of schemes can be found in ERSM300000.

In April 2014 ERS schemes were asked to register for online services. From April 2015 filing returns online became mandatory. No reminders to file were issued but there was an online campaign reminding customers of the filing date and, between February and April 2014, a letter was sent to each registered company to advise them of the change. The ERS returns are information only and contain no tax information as this is collected through PAYE. The filing date for these returns is 6 July.

The first year of the online service was 2014-15. A data corruption issue was identified prior to the filing deadline date which is still an ongoing issue and as a result no penalties have been issued for the year 2014-15. However, we have reserved the right to issue them.

The 2015-16 data has been received correctly and penalties have been charged for late returns. However, to file a return there is an online services template that needs to be uploaded via ERS online service which is accessed from PAYE online and there are a small number of cases working with the IT team to resolve issues with this form.

We are aware that there have been schemes registered in duplication and it is the responsibility of the company to correct this. All of those we are aware of have been issued a letter explaining the action that they need to take.

Penalties

Penalties are charged as follows.

  • 7 to 13 July – late-filing penalties are triggered as returns come in
  • 30 July – penalties normally charged for all unfiled returns
  • 7 October – second penalty
  • 7 January – third penalty

Daily penalties can be charged from nine months after the 6 July and there is no legal limit to the amount we can charge.

Penalty amounts are as follows.

  • £100 – initial penalty
  • £300 – second penalty
  • £300 – third penalty
  • £10 – daily penalty

There will also be Compliance penalties charged in due course. These will be a percentage of the total tax and NIC that would be payable.

If customers are querying the penalty please refer them to Employment-related Securities Bulletin No 23 (GOV.UK).

No interest will be charged on these penalties.

Appeals

There is a 30-day appeal period.

Appeals must be made in writing to:

Employee Shares & Securities Unit
Room G46
100 Parliament Street
London
SW1A 2BQ

or by email to shareschemes@hmrc.gsi.gov.uk.

Appeals will be dealt with manually and, on receipt, the penalty stood over. Appeals received late will only be considered if they meet the ‘reasonable excuse’ criteria. If the customer wishes to appeal late, advise them to write to the Employee Shares & Securities Unit not only with details of their appeal but also with an explanation as to why they are appealing late. Advise the customer that enforcement will continue on the penalty until the appeal is received and accepted by the unit.

IDMS

Penalty items will appear on IDMS with the following charge type descriptions.

  • First penalty - ERS 1st Penalty
  • Second penalty - ERS 2nd Penalty
  • Third penalty - ERS 3rd Penalty
  • Daily penalty/Compliance penalty - ERS Other Pen