An Employment Related Securities (ERS) annual report should be filed by 6 July following the tax year in which an event occurs.
An Employment Related Security (ERS) is a security (e.g. shares, share options) which is acquired as a result of an individual’s (or a connected person’s) prospective, current or previous employment or position as an office holder (company secretary or director).
If a company has an active share option scheme or if there is a reportable event, an ERS return must be submitted to HMRC electronically via the online portal. We can submit a return on a Company’s behalf where we have been granted agent access.
What is required to be reported?
The table below details some examples of what may/may not require to be reported.
| May not require to be reported | May require to be reported |
|---|---|
| Newly incorporated companies - allocation of initial subscriber shares. | Acquisition of securities (including shares) acquired by reason of the individual’s employment or by reason of the employment of another person. Any amendments to these shares/securities thereafter. |
| Newly incorporated companies - allotment of further shares. | Any event relating to an HMRC approved scheme such as a CSOP, EMI or SIP. |
| Newly incorporated companies - shares acquired directly from the formation agents. | Any situation when a s431 election has been signed – this automatically means that a report should be made, even if the election is made on a “protective” basis. |
| Transfer of shares in the normal course of domestic, family or personal relationships. | Doing anything that artificially enhances the market value of a security or disposing of a security for more than market value. |
We have developed three example case studies which will help illustrate these rules in practice.
This is not an exhaustive list and following the judgement of the recent ‘Vermilion’ case we would recommend that appropriate advice is taken prior to issue of any share or share options to any prospective, current or previous employee or office holder.
How we can help
We can confirm if your Company has a reporting obligation and help you to complete the registration process. Once set up, we can also help with the preparation and submission of the annual ERS returns. Even if there has been no event in the year, HMRC will still expect a NIL return where a scheme has been set up. We can also help you close down a scheme if so desired.
If you have any questions on this, please do not hesitate to contact Stephen Oates.
