UTTC Income Tax and NICs: scheme to deliver bonuses in form of shares avoiding income tax and NIC. S18(1) ITEPA Rule 2 – whether employee became ‘entitled to payment’ when amount of bonus determined. Ch 2 Part 7 ITEPA – whether shares were ‘estricted securities’ within s 423(2)(c) – s 429 whether shares were in associated company: s416 control at general meeting level – sham: whether exculpatory provision in Articles a sham. Ramsay- whether on a broad Ramsay approach the scheme was outside Ch 2
Section 423(2)(c) required the market value of the shares on the date of the forced sale to be determined ‘as if there were no provision for transfer, reversion or forfeiture’, but did not require the call options to be disregarded. The statutory hypothesis was a situation in which the shares were not subject to the forced sale provision, but in all other respects – including the existence and triggering of the call options – was the same as it actually was. The employees were entitled on a forced sale to receive only 90% of the market value of their shares on that date, determined as if there were no forced sale provision. The requirement laid down in section 423(2)(c) was therefore met.
Judges:
Henderson J
Citations:
[2012] UKUT 320 (TCC)
Links:
Statutes:
Income Tax (Earnings and Pensions) Act 2003 423
Jurisdiction:
England and Wales
Citing:
At FTTTx – UBS Ag v Revenue and Customs FTTTx 15-Sep-2010
FTTTx Regulation 80, PAYE Regulations – Section 8, Social Security Contributions (Transfer of Functions, etc) Act 1999 – whether sums paid into a share scheme were earnings of the staff for whom they were paid – . .
Cited by:
At UT – DB Group Services (UK) Ltd v Revenue and Customs CA 16-Apr-2014
The two companies had established schemes designed to minimise tax on payments to employees, using a purpose made company to take advantage of exemptions under section 423. In oe cse the Revenue appealed against rejection of its challenge,nd in the . .
At UT – UBS Ag and Another v Revenue and Customs SC 9-Mar-2016
UBS AG devised an employee bonus scheme to take advantage of the provisions of Chapter 2 of the 2003 Act, with the sole purpose other than tax avoidance, and such consequential advantages as would flow from tax avoidance. Several pre-ordained steps . .
Lists of cited by and citing cases may be incomplete.
Income Tax
Updated: 12 November 2022; Ref: scu.466693