Tax compliance: Employment Related Securities | Registration of Trusts

Tax compliance: Employment Related Securities | Registration of Trusts

A significant proportion of our day-to-day work is dealing with tax compliance – making sure that clients report and pay tax correctly.  Occasionally we come across areas of compliance where there is a general lack of awareness of the existence and consequences of the compliance requirements.  Two examples, relevant to this time of year, are Employment Related Securities and Registration of Trusts.

Employment Related Securities – reporting deadline 6 July

The requirements around this relatively complex and, importantly, the reporting requirement exists even if ultimately there is no tax to pay.

In order to keep matters relatively straight-forward, you should check your reporting requirements if, at any time in the tax year, any employee or director (or someone connected with them) has received value as a result of a transaction in shares in the company.

The reporting requirements can capture not only transactions between the company and the relevant individual (e.g. shares gifted to or sold to an individual by the company, shares sold to a company by an individual, etc), but also transactions between individuals (e.g. shares sold to a individual by another individual).

Registration of Trusts – deadline 1 September 2022

The requirement of a taxable trust to register with HMRC has existed for some time.  However, HMRC has now extended the requirements to register even if there is no liability to tax.

More guidance can be found on the government website. 

The issue here is that trusts can exist without there necessarily being any formal paperwork, and therefore it may not always be apparent that such a trust exists.  If an asset is registered in your name, but you are not the beneficial owner of the entire asset, potentially a trust exists and you will need to check whether this must be registered.

The purpose of this requirement to register is potentially two-fold: to ensure that the beneficial owners of assets correctly report and pay tax; and to prevent retrospective claims that assets were held in trust in order split the income and gains derived from these.

If you are in any doubt as to the existence of a trust or the registration requirements, let us know.

How can Haines Watts help?

We advise clients with a broad range of tax related matters throughout the South West region.

If you would like to have a conversation to understand the complexities of the above, please get in touch with your usual Haines Watts contact.