Whether a nil return is required depends on the specific facts.
If there is an unapproved scheme then s421J ITEPA 2003 requires an online ERS return to be filed by a “responsible person (s421L – generally the employer) only if there is a reportable event with s421K. However, s421JA then states anyone who has been a responsible person must file a return each year during the “reportable event period” which ends when “the person will no longer be a responsible person in relation to reportable events”. Therefore, if there was one unapproved issue of shares in 2017/18, then it appears there may be no more reportable events in respect of the one-off “scheme” and so no online ERS return is required. In practice, HMRC wants you to confirm this by telling their computer system that the “ERS scheme” has ended (probably so that it doesn’t automatically issue a penalty notice for 2018/19). You do this by online notification by following the link at the foot of the guidance at:
https://www.gov.uk/guidance/tell-hmrc-about-your-employment-related-securities
If there is an approved scheme then separate legislation applies. For example if the 2017/18 ERS return that your client filed was in respect of an EMI option being granted then paragraph 52 of Schedule 5 ITEPA 2003 requires annual returns to be filed until there are no more unexercised EMI options i.e. the year in which the last EMI option is exercised should be the final year a return is required. However, HMRC still wants you to notify them that the “termination condition” in paragraph 52 has been met by telling them the ERS scheme has ended using the same link as above.
Be careful that you fully understand what is meant by a “reportable event” for the ERS return. See HMRC’s guidance on page ERSM140070 of their Employment Related Securities Manual for some of the less obvious events that may need to be reported.
Please share this article with your clients
If you have a tax query, why not contact the Tax Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at competitive rates.
