Relevant date

The taxpayer notified his employer in October 2007 that he wished to exercise his rights under a share option scheme. He paid £7 636 for 7 998 shares which had a market value of £111 579.

Under the scheme rules the taxpayer had to reimburse the employer for the PAYE due on the option within 90 days but it was not until 28 March 2008 that the employer told him how much he had to pay. The taxpayer paid the following month.

HMRC raised an assessment on the taxpayer charging the tax due under ITEPA 2003 s 222 because he had not reimbursed the employer within the 90-day time limit. The taxpayer appealed.

The First-tier Tribunal noted that under the rules relating to the employer’s option the exercise of the option was conditional on the employee settling the PAYE within 30 days.

The October...