HM Revenue & Customs (HMRC) are in the process of issuing penalty notices for the late filing of share scheme annual returns. This will happen in any case where a scheme has been registered online with HMRC but an annual return for that scheme was not filed online with HMRC by the deadline of 6 July 2016. The penalty is £100.
Among the teething troubles that surrounded the introduction of online filing in 2015, there were many reports of companies registering share plans wrongly; for example, because the name or type of the plan was entered incorrectly. This was a pain because there was no ability to make corrections once the online form had been submitted. You had to start again, entering the correct details of the scheme as a new plan, to which HMRC gave a different unique reference number. However, you were supposed to tidy up by closing the incorrect scheme and also submitting a “nil return”for that scheme on or before 6 July. You can bet your mortgage that a good number of the penalty notices relate to incorrectly-registered plans that weren’t closed and/or didn’t have a nil return filed.
If you correctly registered a plan online, but there just happened to be no reportable events (for example, grants or exercises) under that plan in the 2015-2016 tax year, you still need to submit a nil return for that year and every year during which the plan is outstanding.
Of course, if you have a properly-registered plan and the annual return was overlooked, make sure you correct the situation in good time, because a further £300 penalty will be due if the return is still outstanding at 6 October 2016. If you have a “reasonable excuse” for the annual return not being made in time, you can appeal against the penalty, but the examples are limited to serious situations – “I was on holiday” won’t cut the mustard!