ITEPA03/S449 excludes from a Chapter 4 charge cases where the benefit is received in certain control situation - see ERSM20290 for detailed guidance.
A ferry company provides travel concessions to all its ordinary shareholders. 10% of the shares are held by employees and are employment-related securities, the remaining 90% are not. The minority employee shareholders are exempt from a Chapter 4 charge on the benefit of the travel concession, because a similar benefit is received by the owners of all the company's shares of that class and, immediately before receipt of that benefit, the majority of the company shares of that class are not employment-related securities (ITEPA03/S449 (3))
A manufacturing company is controlled by its employees through
its single class of ordinary shares. It allows all shareholders to
purchase goods produced by the company at 20% discount. No benefit
is charged under Chapter 4 because a similar benefit is received by
the owners of all the company's shares of that class and,
immediately before receipt of that benefit, the company is
employee-controlled by virtue of holdings of shares of that class
(ITEPA03/S449 (2)). Such benefits may, of course, be taxed under
the general benefits code.
Not all benefits taken up
Although the legislation requires a similar benefit to be
received by all owners of the class of share, HMRC will accept that
a right to a similar benefit given to all shareholders of that
class of share, whether taken up or not, will satisfy this test
– provided (as from 7 May 2004) that it is not part of a
scheme for avoiding Income Tax or NIC.
The founder of Newco exercises his control through owning ordinary shares, whilst the employees have A-ordinary shares without voting rights. A benefit, such as bonus shares, only provided to A-ordinary shareholders would not be excluded from Chapter 4 because:
