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COLIN KENDON considers the impact of EMI options on the sale of company shares.
KEY POINTS:
- The importance of timing when granting options.
- The relationship between grant of options and negotiations can affect valuation.
- Corporation tax relief on the exercise of options.
- Paper for paper treatment for option shares.
- Spouse transfers and share identification rules.
- Taper relief and the earn-out structure.
THIS IS THE second of two articles looking at some of the tax pitfalls with private company acquisitions. The first article ('Harry's game' Taxation 8 February 2007 page 160) considered the personal tax position of owner-managers; this article considers issues relating to enterprise management incentives (EMI) options. References to 'paras' are to paragraphs of ITEPA 2003 Sch 5 unless otherwise stated.
Readers of the first article will recall our client Harry who owns 100% of Target Limited. Harry intends...
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