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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

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HM Revenue & Customs
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Schedule 2 share incentive plan (SIP): Notification & Enquiries: Notice of enquiry

An enquiry may be opened: –

 

  1. into the declaration made by the company when notifying the Schedule 2 SIP to HMRC (paragraph 81A - see ETASSUM20110);
  • HMRC may send a notice of enquiry into the declaration made by the company when notifying the Schedule 2 SIP to HMRC no later than 6 July in the tax year following the tax year in which the ‘initial notification deadline’ falls. The ‘initial notification deadline’ is 6 July in the tax year following that in which the first award was made (paragraph 81F(2)(a)).
  • HMRC can enquire into whether the plan meets the requirements of Parts 2-9 of Schedule 2 and whether the plan has been operated in accordance with the plan rules.
  • If a Schedule 2 SIP is notified after 6 July following the end of the tax year in which the first award is made, HMRC may send a notice of enquiry no later than 6 July in the second year following the year in which notice is given (paragraph 81F(2)(b)). So for example, if a company makes the first awards under a scheme on 31 December 2014 and notifies the scheme on 31 December 2015, HMRC can open an enquiry any time up to and including 6 July 2017.
  1. into the declaration made by the company when notifying an alteration to a key feature or variation of capital (see ETASSUM27140);

HMRC may send a notice of enquiry into a declaration made by the company when notifying an alteration to a key feature or variation of capital at any time within 12 months from the date on which the return containing the declaration is given (paragraph 81F(3)).

  1. if HMRC have reasonable grounds for believing that the requirements of Parts 2-9 of Schedule 2 are not or have not been met in relation to the Schedule 2 SIP.

A notice of enquiry can be issued at any time if HMRC have reasonable grounds for believing that the requirements of Parts 2-9 of Schedule 2 are not met or have not been met in relation to the Schedule 2 SIP (paragraph 81F(4) and (5)). “Reasonable grounds” is not defined in the statute therefore the natural meaning would apply.

A notice may be given and an enquiry undertaken even if the termination condition has been met in relation to the Schedule 2 SIP (see ETASSUM27180).

Where a plan was approved by HMRC prior to 6 April 2014, it is accepted that the plan met the requirements of the legislation at the date of approval. The approval will not be reviewed by HMRC as part of an enquiry unless new information comes to light which was not available at the time the approval was given.