Tax advantaged share scheme factsheets: CC/FS1f, CC/FS32, CC/FS33

HMRC's factsheet CC/FS1f says it tells you about compliance checks into tax advantaged share schemes, which HMRC carries out to make sure schemes meet the requirements for tax advantaged status.

“This factsheet tells you about compliance checks into tax advantaged share schemes. … We carry out checks into schemes to make sure they meet the requirements for tax advantaged status.”

HMRC's factsheet CC/FS1f lists the schemes it covers: the Schedule 2 Share Incentive Plan (SIP), the Schedule 3 Save As You Earn (SAYE) option scheme, the Schedule 4 Company Share Option Plan (CSOP) and Enterprise Management Incentives (EMI).

“Schedule 2 Share Incentive Plan (SIP) … Schedule 3 Save As You Earn (SAYE) option scheme … Schedule 4 Company Share Option Plan (CSOP) … Enterprise Management Incentives (EMI)”

HMRC's factsheet CC/FS1f says that if HMRC starts a check it will tell you what it is checking, ask you for any information or documents it may need, and explain why it needs something if you are not sure.

“If we start a check, we’ll tell you what we’re checking. We’ll ask you to give us any information or documents that we may need. If you’re not sure why we’re asking for something, please tell us and we’ll explain why we need it.”

HMRC's factsheet CC/FS1f says you can tell HMRC if you cannot do what it asks, or if you think something it has asked for is unreasonable or not relevant, and that HMRC will consider your reasons and, if it still thinks it needs the item, tell you why.

“Please tell us if you cannot do what we ask, or if you think something we’ve asked for is unreasonable or not relevant to the check. We’ll consider your reasons carefully and if we still think that we need it, we’ll tell you why.”

HMRC's factsheet CC/FS1f says that if something is wrong HMRC will work with you to put it right and to determine any additional tax, late payment interest and penalties that may be due, and that working with HMRC is likely to reduce any penalties it may charge.

“If there’s something wrong, we’ll work with you to put it right. We’ll work with you to determine the amount of any additional tax, late payment interest and penalties that may be due. Working with us is likely to reduce the amount of any penalties that we may charge.”

HMRC's factsheet CC/FS1f says HMRC may send you an information notice if it has asked for information or documents and you do not provide them, or asked to visit your business premises to inspect records and you refuse, and that the notice would require you to give HMRC what it needs.

“We may send you an information notice if we’ve: … asked you for information or documents and you don’t provide them … asked to visit your business premises to inspect your business records and you refuse … This notice would require you to give us the documents and information we need.”

HMRC's factsheet CC/FS1f says that for the largest and most complex businesses, HMRC may use its formal powers or issue an assessment notice in certain circumstances, for example where a time limit for making an assessment is approaching or an issue cannot be resolved and information must be formally requested.

“The tax affairs of the largest and most complex businesses are looked after by the Large Business part of HMRC. … We may however need to use our formal powers or issue an assessment notice under certain circumstances. … where a time limit for making an assessment is approaching … if we’ve been unable to resolve an issue and need to formally request information from you”

HMRC's factsheet CC/FS1f says that if HMRC makes a decision you can appeal against, you will usually have 3 options within 30 days: send new information to the CCM dealing with the check, have the case reviewed by an HMRC officer not involved in it, or have an independent tribunal hear your appeal.

“You’ll usually have 3 options. Within 30 days you can: … send new information to the CCM dealing with the check and ask them to take it into account … have your case reviewed by an HMRC officer who hasn’t been involved in the matter … arrange for an independent tribunal to hear your appeal and decide the matter”

HMRC's factsheet CC/FS1f says HMRC may observe, monitor, record and retain internet data available to anyone, known as open source material, which includes news reports, internet sites, Companies House and Land Registry records, blogs and social networking sites where no privacy settings have been applied.

“We may observe, monitor, record and retain internet data which is available to anyone. This is known as ‘open source’ material and includes news reports, internet sites, Companies House and Land Registry records, blogs and social networking sites where no privacy settings have been applied.”

HMRC's factsheet CC/FS1f says that if your health or personal circumstances may make it difficult to deal with HMRC you can tell the officer who contacted you, and that you can also ask someone else, such as a professional adviser, friend or relative, to deal with HMRC for you.

“please tell the officer who contacted you. They’ll help you in whatever way they can. … You can also ask someone else to deal with us on your behalf, for example, a professional adviser, friend, or relative.”

HMRC's factsheet CC/FS1f says you may also be able to ask for an HMRC specialist officer to act as a neutral facilitator to help resolve a dispute, called Alternative Dispute Resolution (ADR), and that the officer dealing with the check will tell you if it is available for your dispute.

“You may also be able to ask for an HMRC specialist officer to act as a neutral facilitator to help resolve the dispute. We call this Alternative Dispute Resolution (ADR). … The officer dealing with the check will tell you if ADR is available for your dispute.”

HMRC's factsheet CC/FS32 says it tells you about the penalties HMRC may charge if your annual return contains a material inaccuracy.

“This factsheet tells you about penalties we may charge if your annual return contains … a material inaccuracy.”

HMRC's factsheet CC/FS32 says HMRC may charge a penalty of up to £5,000 if, after a compliance check, it decides the return contains a material inaccuracy, you have not sent an amended return, and the inaccuracy was careless or deliberate.

“We may charge you a penalty of up to £5,000 if, after carrying out a compliance check we decide that the return contains a material inaccuracy and: … you have not sent us an amended return … the inaccuracy was careless, or deliberate”

HMRC's factsheet CC/FS32 says a company must submit an amended return if it becomes aware that information was not included, or that something was included that should not have been, and that once it has identified an inaccuracy it must submit the amended return without delay.

“A company must submit an amended return if: … it becomes aware that information was not included in the submitted return … it becomes aware that the submitted return includes something that should not have been included … Once the company has identified an inaccuracy, it must submit the amended return without delay.”

HMRC's factsheet CC/FS32 describes 2 types of behaviour: failing to take reasonable care to get things right, and knowing that a return or document was inaccurate when you sent it to HMRC.

“There are 2 types of behaviour, these are as follows. … This is where you failed to take reasonable care to get things right. … This is where you knew that a return or document was inaccurate when you sent it to us.”

HMRC's factsheet CC/FS32 gives the penalty ranges as 0% to 30% for careless behaviour and 35% to 100% for deliberate behaviour.

“Careless | 0% to 30% | … Deliberate | 35% to 100% |”

HMRC's factsheet CC/FS32 says the quality of disclosure (telling, helping and giving) determines where the penalty falls within the range, with a reduction of up to 30% for telling, up to 40% for helping and up to 30% for giving access to records.

“The quality of disclosure (telling, helping and giving), determines where the penalty will fall within … telling we give up to 30% … helping we give up to 40% … giving access to records we give up to 30%”

HMRC's factsheet CC/FS32 gives a worked example: the penalty is the maximum amount chargeable multiplied by the penalty percentage rate, so with a rate of 9% on £5,000 the penalty would be £450.

“To work out the amount of the penalty, we multiply the maximum amount chargeable by the penalty percentage rate. For example, the penalty would be £450 (£5,000 × 9% = £450).”

HMRC's factsheet CC/FS32 says HMRC may carry out a criminal investigation with a view to prosecution if you have deliberately done something wrong.

“We may carry out a criminal investigation with a view to prosecution, if you’ve deliberately done something wrong.”

HMRC's factsheet CC/FS32 says that if your health or personal circumstances may make it difficult to deal with HMRC you can tell the officer who has contacted you, and that you can also ask someone else, such as a professional adviser, friend or relative, to deal with HMRC for you.

“please tell the officer that’s contacted you. We’ll help you in whatever way we can. … You can also ask someone else to deal with us on your behalf, for example, a professional adviser, friend or relative.”

HMRC's factsheet CC/FS33 says it covers penalties HMRC may charge if your share scheme does not meet the requirements for tax advantaged status, for Schedule 2 Share Incentive Plans, Schedule 3 Save As You Earn option schemes and Schedule 4 Company Share Option Plans.

“This factsheet tells you about penalties we may charge if your share scheme does not meet the requirements for tax advantaged status. … Schedule 2 Share Incentive Plans (SIP) … Schedule 3 Save As You Earn (SAYE) option schemes … Schedule 4 Company Share Option Plans (CSOP)”

HMRC's factsheet CC/FS33 says HMRC may charge a penalty if, after a compliance check, it finds the scheme does not meet the requirements for tax advantaged status, and that the amount depends on whether the error is serious or less serious.

“We may charge you a penalty if, after carrying out a compliance check we find the scheme does not meet the requirements for tax advantaged status. … The amount of any penalty depends on whether the error is ‘serious’ or ‘less serious’.”

HMRC's factsheet CC/FS33 says a serious error is a fundamental or material error in the plan rules or in the way the plan is operated, while a less serious error is one that can be put right by amending or repairing the plan rules.

“A ‘serious’ error is a fundamental or material error in the plan rules or in the way in which the plan is operated. … A ‘less serious’ error is an error that can be put right by amending or repairing the plan rules.”

HMRC's factsheet CC/FS33 says that for serious errors the penalty is a percentage of the Income Tax and National Insurance contributions (NICs) relief given or due on options granted to employees, and that legally HMRC can charge up to twice that relief, but this would be unusual.

“For serious errors, we charge tax related penalties as a percentage of the Income Tax and National Insurance contributions (NICs) relief given or due on options granted to employees. Legally, we can charge up to twice the amount of tax and NICs relief given or due, but this would be unusual.”

HMRC's factsheet CC/FS33 says a minimum penalty applies for serious errors, equal to the total Income Tax and NICs HMRC estimates would have been payable if the scheme had not been operated in a tax advantaged way, for the period from when the serious error started to the date of the closure notice or the date specified in that notice.

“A minimum penalty will apply. This will be: … equal to the total Income Tax and NICs we estimate would have been payable if the scheme had not been operated in a tax advantaged way … for the period between the date when the serious error started and the date of the closure notice or the date specified in that notice”

HMRC's factsheet CC/FS33 says the disclosure reduction for serious errors works as follows: with an unprompted disclosure the maximum penalty is reduced to 100% of the total tax and NICs that would have been payable, and with a prompted disclosure to 150% of that amount.

“The disclosure reduction is worked out as follows: … unprompted disclosure … the maximum penalty will be reduced to 100% of the total tax and NICs that would have been payable … prompted disclosure … the maximum penalty will be reduced to 150% of the total tax and NICs that would have been payable”

HMRC's factsheet CC/FS33 gives an example of a less serious error: tax and NICs relief given or due of £4,000 makes the maximum penalty £4,000, and with a prompted disclosure reduction of 50% the penalty due is £2,000.

“In this example the total amount of tax and NICs relief given or due is £4,000, therefore the maximum penalty is £4,000. … Less prompted disclosure reduction of 50% of the amount of tax and NICs relief | £2,000 | … Penalty due | £2,000 |”

HMRC's factsheet CC/FS33 says that for a less serious error HMRC will ask you to repair or correct it within 90 days of either the end of the appeal period of the decision or the date an appeal against the decision is determined or withdrawn.

“Where we consider the error to be ’less serious‘, we will ask you to ‘repair’ or correct the error. We will ask you to do this within 90 days of either: … the end of the appeal period of the decision … the date that an appeal against the decision is determined or withdrawn”

HMRC's factsheet CC/FS33 says that if you do not repair these errors HMRC will charge a further penalty based on the tax and NICs relief given or due on share awards or options, and that legally the maximum is up to twice that relief, but this would be unusual.

“If you do not repair these errors, we will charge you a further penalty. This will be based on the amount of tax and NICs relief given or due on share awards or options granted to employees. Legally, the maximum penalty we can charge is up to twice the amount of tax and NICs relief given or due but this would be unusual.”

HMRC's factsheet CC/FS33 says that if your health or personal circumstances may make it difficult to deal with HMRC you can tell the officer who has contacted you, and that you can also ask someone else, such as a professional adviser, friend or relative, to deal with HMRC for you.

“please tell the officer that’s contacted you. We’ll help you in whatever way we can. … You can also ask someone else to deal with us on your behalf, for example, a professional adviser, friend or relative.”