Inland Revenue Shares Valuation Fiscal Forum 8 January 2004

Present

Representative

Company / Organisation

John Harrison	PricewaterhouseCoopers, London
Liz Morgan	PricewaterhouseCoopers, London
Brian Edwards	PricewaterhouseCoopers, London
Ed Higgs	PricewaterhouseCoopers, London
Tony Lynch	PricewaterhouseCoopers, Birmingham
Mark Evans	Parmentier Arthur Services Ltd, London
John Cooper	KPMG, London
Mandy Neale	KPMG, London
Amanda Allen	KPMG, Birmingham
Angela Belsten	Ernst & Young, London
Paul Fisher	Bruce Sutherland & Co, Moreton-in-Marsh
Andrew Caldwell	BDO Stoy Hayward, London
Wendy Hallam	BDO Stoy Hayward, London
David Mitchell	BDO Stoy Hayward, London
Lee Whotton	Deloitte & Touche, Nottingham
Lynette Snodin	Deloitte & Touche, Nottingham
Ken Read	Deloitte & Touche, Nottingham
Tim Jameson	Chiltern Valuation Services, London
Tony Hindley	Valuation Consulting Ltd, London
Ian Murphie	The RM2 Partnership, New Malden
Stuart Davis	Grant Thornton, London
Kirti Seth	Grant Thornton, Leicester
Mahesh Varia	Travers Smith Braithwaite, London
John Stevenson	Tenon Ltd, Nottingham
Michael Weaver	Gravitas Partners, London
Diane Elliott	WJB Chiltern, London
Michael Staples	Employee Share Schemes (ESS)
Martin Fletcher	Employee Share Schemes
Colin Gibson	Shares Valuation (SV)
Fred Cook	Shares Valuation
Steve Gridley	Shares Valuation
Paul Simpson	Shares Valuation
Lee Mann	Shares Valuation

Inland Revenue Shares Valuation Fiscal Forum 8 January 2004
Apologies
Representative	Company / Organisation

Ian Logan	PricewaterhouseCoopers, Birmingham
Andy Coaton	PricewaterhouseCoopers, Birmingham
Stuart Drummond	The Law Society of Scotland, Edinburgh
Ian Clark	Turcan Connell (On behalf of Law Society of Scotland)
Bruce Sutherland	Bruce Sutherland & Co, Moreton-in-Marsh
Jenny Nelder	Bruce Sutherland (on behalf of Institute of Directors)
John Blamey	KPMG, London
Tim Harding	KPMG, London
Anne Daly	KPMG, London
Jenny Nelder	On behalf of Institute of Directors
Ewan Wallace	W D Johnston & Carmichael (On behalf of ICAS)
Keith Eamer Simon Jennings	BDO Stoy Hayward, London Rawlinson Hunter (on behalf of ICAEW)
Trevor McDonagh	Deloitte & Touche, London
Sue Tilstone	Deloitte & Touche, Nottingham
Mervyn Woods	Confederation Of British Industries, London
Ian Brewer	Valuation Consulting Ltd, London
Colin Paterson	The RM2 Partnership, New Malden
John Neighbour	Hardcastle Burton, Hoddesdon
Jonathon Brownson	Royce Peeling Green, Manchester
Richard Fleet	Sir Robert McAlpine Ltd, Hemel Hempstead
David Haigh	Brand Finance Plc, Twickenham
Jim Calvert	DoveBid Valuation Services, London
Travis Taylor	Gravitas Partners, London
Errol Danziger	Danziger plc, London
Paul Giles	Browne Jacobson, Nottingham
Roy Hogg	WJB Chiltern, Nottingham
Louise Speke	The Law Society, London
Angela Hennessey	A Hennessey, London
David Perrin	WJB Chiltern (on behalf of CIOT)
Steve Lygo	Parmentier Arthur Services Ltd, St. Ives, Cambs
Alan Wallis	Ernst & Young, London

Inland Revenue Shares Valuation Fiscal Forum 8 January 2004

Executive Summary

Introductions and Apologies
Apologies read
Minutes of Last Meeting
Minutes agreed.
Retrospective agreement of market value at date of grant (point 7.)
SV Performance 2003
Increase in shares schemes and capital gains work
Customer service targets met
Presentation by Employee Share Schemes
New Scheme of Taxation on Employment-related Securities introduced by Schedules 22, 23 & 24 FA 2003
Tendering for SV panel of independent expert witnesses
The role of the expert witness
The tendering process and key dates.
Next Meeting
This was provisionally booked for October 2004 – now confirmed
12 October 2004
The meeting will include representatives from ESS
A.O.B

Minutes

The meeting was held at the Chartered Institute of Taxation, 12 Upper Belgrave Street, London and was chaired by Colin Gibson of IR Capital Taxes, Shares Valuation (SV).

1. Introductions and Apologies

Colin Gibson opened the meeting at 10.30. All attendees introduced themselves.
Colin Gibson said that a full list of apologies would be included with the minutes.

2. Minutes of the Last Meeting and Matters Arising

Minutes agreed.

In some EMI cases, options are knowingly granted at less than market value without a prior agreement with SV as to market value. Nevertheless, the general sentiment expressed by practitioners was that it would be very helpful to have market value agreed retrospectively in order to quantify any employment tax charge payable on the eventual exercise of the option. Steve Gridley said that SV would consider agreeing market value at the date of grant if an approach was made within the 6 months following the date of grant.

3. SV Performance 2003

Colin Gibson reported that there had been an increase in the number of valuations relating to IHT and Capital Gains Tax work. He felt that risk assessment procedures and specific targeting of CG work in the Network had been the primary factors behind the increase.

Colin Gibson confirmed that SV were meeting published customer service targets and post targets. With regard to settlement times, he explained that of the 25,000 or so valuations received in the year, SV settled 90% within 12 months. The average settlement time was 5 - 6 months per case.

4. Presentation by Technical Advisors from the Revenue's Employee Share Schemes team

Martin Fletcher and Michael Staples delivered a presentation (Should you require a PowerPoint format of the presentation slides please e-mail mandy.dowell-buddell@ir.gsi.gov.uk) entitled "New Scheme of Taxation on Employment-related Securities introduced by Schedules 22, 23 & 24 FA 2003".

A lively debate on the new legislation took place during and after the presentation. During the debate Michael Staples confirmed that technical aspects of individual cases would need to be resolved with the local Inspector. The Inspector would consult Share Schemes where appropriate.

The debate included the following issues:

The Revenue’s interpretation of market value.
An understanding of what comprises an "interest" in shares.
What do/do not constitute restrictions.

From the perspective of practitioners present at the meeting various ambiguities in the legislation and FAQs were left unresolved. It is hoped that these issues will become clearer over time.

Martin Fletcher mentioned that a form for the returns required by the new legislation was being designed. The form will be published on the IR website in due course. The returns should be sent to the Employee Share Schemes Unit in London.

5. Tendering for SV panel of independent expert witnesses

Fred Cook said that the panel of independent expert witnesses, which presently consists of five individuals, was coming to the end of its contractual term in June. During the past year SV has asked an expert to provide an independent opinion of value in eight cases. Three cases are heading for litigation.

Fred Cook explained that the forthcoming tendering process would be a transparent procedure leading to an appointment on merit. Applicants needed to pay close attention to the paperwork. Tenders would be judged on the basis of the content. Applicants could not assume that any knowledge of them held by Shares Valuation would count. The post had been advertised in "Taxation" on 27 November 2003 and the deadline for entries was twelve noon on 26 January 2004. Subsequent proposed key dates are as follows:

23^rd February - Invitation to tender
2^nd March - Meeting to set the scene
14^th June - Contracts awarded

6. Next Meeting

Colin Gibson asked the Forum when they would like the next meeting. John Harrison suggested that perhaps future meetings should be 9 months apart. The consensus of opinion was that this was a good idea.

Colin Gibson suggested that the next meeting should be in October 2004. Michael Staples confirmed that representatives from ESS would attend the next meeting. Next meeting now confirmed to be 12 October 2004.

7.Any Other Business

There being no other business the meeting ended at approximately 1.00pm.

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