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HMRC have taken steps to streamline their share scheme approval process, in an effort to provide taxpayers with faster responses to their applications, reduce the time taken to review draft documents, and more quickly give a formal endorsement to proposed company share option plan (CSOP) schemes, share incentive plan (SIP) schemes, and save as you earn (SAYE) schemes.
For new schemes, the Revenue's employee shares and securities Unit (ESSU) provides an informal checklist, which should be completed and returned to demonstrate how the rules and ancillary documents satisfy legislation.
The taxman will review the draft documents; the company will be advised of necessary changes or whether or not the scheme is worthy of being approved.
The company must establish the scheme in the form agreed with ESSU before it can be formally approved by HMRC, because it must have come into existence from a legal point of view.
Documentary evidence of the establishment must be supplied, generally by resolution of the company's shareholders in a general meeting. In some cases, directors will have powers to establish a scheme under the business's articles of association.
Changes made to scheme documents after the taxman has reviewed them should be tracked and explained.
With regard to scheme amendments, only those affecting key features require Revenue approval. In such cases, the existing document should be tracked to show the changes, and a full explanation of significant changes must be provided.
