Revenue Form 42 Compliance

Employment-related Securities and Options

Reportable events under Section 421J Income Tax (Earnings and Pensions) Act 2003

This is a reporting requirement in respect of shares or securities in connection with an employment. Employment includes past, present and future employment or a directorship. We are pleased to announce that in his pre-budget statement the Chancellor abolished with immediate effect, shares acquired by new company founders (the subscriber share holders) if they intend to become employees or directors of the company as a reportable event. they do of course have to meet certain requirements, the extracts from the HMRC publications are:-
Where a limited company is incorporated in the UK and initial subscriber shares are acquired:

• directly on incorporation, or
• on transfer from a company formation agent, or
• from another person forming the company, for example a solicitor or accountant

A report is not required if all the following conditions are met:

• all the initial subscriber shares (and no form of security other than shares), are acquired at nominal value and
• the shares are not acquired by reason of or in connection with another employment, and
• the shares are acquired by a person who is a director or prospective director of the company. or someone who has a personal family relationship with the director and the right or opportunity is made available in the normal course of the domestic, family or personal relationship of that person.

The majority of newly incorporated companies should meet the above conditions and will not have to complete Form 42 in respect of the subscriber shares.

Where a company has transactions in its shares or securities in addition to the subscriber shares a report of those additional transactions still has to be made on Form 42.

In addition to the subscriber shares, there are other events that may not have reportable events for Form 42, including transfers of shares in the normal course of domestic, family or personal relationships. Each case will need looking at on an individual basis to make the appropriate decision.

Our Form 42 service involves completion of the relevant section of form 42, filing with the Revenue and supplying a copy for the company secretaries' records. A very popular service to Accountants as this would ensure that this sometimes burdensome and mostly overlooked requirement is done; and will give you peace of mind that your clients are not facing large penalties for non compliance. This service can be ordered by a tick box on our order form.