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In an Employment Related Securities (ERS) Bulletin for March 2022 (bulletin 40), HMRC has linked to helpful guidance on what it considers to be a reasonable excuse for failing to meet submission deadlines for annual ERS returns (due on 6th July following the end of the tax year to which they relate) and notification of EMI options (due within 92 days after grant).
What counts as a reasonable excuse is broadly something which is outside your control. Examples include serious illness, computer failure just before sending the return, HMRC online service problems, the death of a partner or close relative shortly before the deadline and possibly Covid.
What will not count as a reasonable excuse is where you (broadly) have some control. Finding the HMRC system too difficult to use is not a reasonable excuse, neither is making a mistake on your return or not receiving a reminder from HMRC. It is no defence to claim your professional advisers let you down, they are seen as an extension of you. If you rely on someone such as your accountant or lawyer to send in your return and they don’t, that’s not a reasonable excuse and you would be well advised to set a diary reminder (perhaps for late June) and chase them to ensure it is completed on time.
With the end of this tax year fast approaching, ERS annual returns will be soon be due. There are a number of returns, such as an EMI annual return or what used to be known as a “form 42” (covering items such as shares / unapproved options). Remember that, once you have begun to file annual returns each year, you must continue even if there are no events (such as share issues to employees / unapproved option grants) in a particular tax year (a nil return needs to be submitted, which is a quick process).
The sensible advice is to submit your returns well ahead of the 6 July deadline to avoid any worries about late submission and whether you have a reasonable excuse. Historically, the HMRC Online website has been known to slow down or crash on or approaching the deadline day and it is possible your submission process might be much smoother if completed a little earlier. It also gives you some time to seek advice or gather additional data if you realise you are unsure on the procedure or are missing information such as NIC numbers when it comes to completing the return.
Returns are submitted online. Gone are the days of completing a hard copy return and putting it in the post to HMRC, you should instead log into your HMRC Online account and navigate to the employment related securities section, from where you can select the type of return needed and complete the return on screen (you may need to upload a spread sheet, depending on what has taken place in the period the return covers).
Matt Spencer is a partner within the Corporate and Commercial team, specialising in tax law, advising on and efficiently structuring a wide range of corporate and real estate transactions including M&A, land transfers, developments and leases.He is also expert in employment tax issues and the structuring of employee incentive schemes as well as VAT issues in the public and private sector.
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