April 15, 2020 / UK
The 2019/20 tax year has just ended, and employers should now begin to think about submitting their Employment Related Securities (ERS) Annual Return (formerly known as ‘Form 42’) for any new and existing share plans (HMRC tax advantaged and non-tax advantaged) for the 2019/20 tax year. HMRC will accept share plan returns from the 6th April 2020 and the deadline is 6th July 2020. We are not aware of any extensions being granted by HMRC to this deadline due to COVID-19 so employers should continue to prepare in the usual manner.
What does the employer need to do?
Reporting on the ERS Annual Return involves a number of key tasks that are essential in submitting the return to HMRC. These include:
Reportable transactions/events are detailed below:
Penalties and interest for late filing/error in returns
It is important that returns are filed before 6th July 2020 as late filings will result in an automatic penalty from HMRC and will have significant consequences for tax-advantaged plans. Note that, if you are registering a new plan, we advise completing the registration well in advance of this deadline as the registration process can take several days to complete.
A penalty of up to £5,000 can be inflicted for material inaccuracy in a return which is not immediately addressed and resolved. Therefore, we advise companies to get trusted, professional help while submitting the returns to ensure that they are filed correctly and in a timely manner.
Be ready for any due diligences or HMRC enquiry
Any review by HMRC or an advisor on a due diligence will ask for copies of ERS Annual Returns so have copies ready. Advisors will also check for evidence of self-verification and that notifications have been made for any tax advantaged plans to ensure that beneficial tax treatment is maintained.
Common errors/issues that occur while filing returns
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