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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

HM Revenue & Customs
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Schedule 4 Company Share Option Plan (CSOP): Supplementary and defined terms: Tax case - Reed International

Reed International plc sought to alter the exercise provisions of its approved executive and savings-related share option schemes and apply the altered terms to options already granted. It wanted to remove one of a number of contingencies, the earliest of which would have triggered the right to exercise an option and its subsequent lapse six months later (to the extent unexercised). In the Court of Appeal it was held that the effect of the alteration was to vary the existing rights of the option-holders, not to create new or different rights.

In the Court of Appeal, Lord Justice Nourse:

  • drew the distinction between an option-holder:


  • obtaining a right which he did not have before (as in the Eurocopy case, which he accepted was correctly decided),
  • not ceasing to have a right which he did previously have (which he considered to be the position in the Reed International plc schemes);


  • considered that a very minor improvement in existing rights would not have the effect of the option-holder obtaining a new or different right to acquire shares, but acknowledged that the question of a de minimis improvement is a matter of degree.