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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 4 Company Share Option Plan (CSOP): Eligibility of individuals to participate: The employment requirement: Service companies

An individual may be a director or employee of a service company (Company S) from whom he receives his remuneration, and may carry out all of his work for another company (Company C) which makes payments to Company S for the individual’s services. The individual is not eligible to participate in Company C’s Schedule 4 CSOP scheme unless he is a full-time director or qualifying employee of Company C.

If necessary the individual’s service contract as a director or employee of Company C might have to be examined in detail to establish whether he is a full-time director or qualifying employee (as defined in the relevant scheme) of Company C. An individual is very unlikely to hold a full-time office or employment with Company C if he is wholly or mainly remunerated by Company S, the service company, which has an obligation to operate PAYE on the payments made for the individual’s work.