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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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What the rules provide

The rules are targeted at obtaining details of new avoidance and there are a series of tests which the promoter is required to consider in deciding whether a disclosure is necessary. These tests are designed to remove the obligation to disclose everyday taxplanning arrangements and are explained in detail within part 4 of the Guidance Notes (see The tests are as follows and disclosure is required if the answer is yes to all thefollowing questions:

  1. Does the planning enable or expect any person to obtain a tax advantage?

(This includes IT, CGT, and CT)

  1. Is this advantage a main benefit that might be expected to arise?

(It does not have to be the main benefit - for example a scheme designed to avoid NIC is also likely to provide an IT advantage)

  1. Does the advantage arise from the use of specified products?

For employment planning these are:

    • Securities or associated rights;
    • Payments to trustees and intermediaries;
    • Loans
  • The regulations also specify the following are not employment products (unless they are part of a wider avoidance arrangement):
    • Approved share and EMI schemes
    • Payments to a trust established for the purpose of:
      1. an approved CSOP
      2. an approved SAYE schemes
      3. an approved share incentive plans
      4. an approved pension schemes
    •   Meanings of these terms are provided at 4.13 et seq in the Guidance Notes.

  1. Could a promoter charge a premium fee or require the client to enter into a confidentiality agreement in relation to the arrangements?
  * (This is a hypothetical question. It does not matter that a premium fee was not charged or that no confidentiality agreement was made. Further details of these tests is given within para 4.2 of the Guidance Notes).       

How to make a Disclosure

Disclosures have to be made to the AAG on prescribed forms (see the forms section of depending on who is making the disclosure. In every instance the disclosure must contain:

  • a summary of the proposal or arrangements
  • an explanation of each element in the proposal or arrangements from which the expected tax advantage arises
  • the statutory provisions relevant to those elements of the proposal or arrangements from which the expected tax advantage arises

The information provided must be explained in sufficient detail for an Officer of the Board to understand the tax advantage arising.