SVM110060 - Tax Advantaged share schemes: Procedural Matters on Approved Schemes

• The Employee Shares and Securities Unit (ESSU) has responsibility for the approval of schemes and will provide any assistance that you need.

Subject to the comments below you must make sure that the scheme is approved before you commence the valuation.

If the company has already issued options under an approved scheme without negotiating a value with us, refer the matter to ESSU.

• Agents will often contact us just prior to approval, so that options may be granted on approval. This is acceptable, but you may wish to get a timetable from the agent, so that you do not get involved too early. A typical life of an approved share option scheme is:

1. Draft scheme documents are submitted to ESSU for review
2. Correspondence on the scheme takes place leading to the final submission of scheme documents and Articles of Association
3. ESSU approves the scheme if it satisfies the legislation.
4. From time to time amendments to scheme rules may be made provided they are approved by ESSU
5. If a variation in share capital is to take / has taken place, it may be necessary to agree share values so that ESSU can agree the appropriate adjustment to the options already granted. If the agents request such a valuation you should contact ESSU for confirmation that the adjustment is required under the rules of the scheme.
6. Returns for all approved share schemes are issued annually to obtain details of options granted and exercised, variations in share capital, appropriations under profit sharing schemes and other transactions under the scheme.
7. Where the annual returns show income tax liability ESSU notifies the taxpayer’s PAYE office of the relevant details.