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Sharing the burden

19 February 2008 / Andy Goodman
Issue: 4146 / Categories: Comment & Analysis
ANDY GOODMAN CTA looks at the pitfalls and implications of failure to operate tax and National Insurance withholding on employee share schemes


  • Problems can arise from options granted from the overseas parent company.
  • Are the shares readily convertible assets at the time of the chargeable event?
  • Failure to operate PAYE and National Insurance can be expensive and time consuming.
  • It may be difficult to recover tax from former employees or those who have already spent the cash.
  • It is important to fully understand the technical issues.

It is rarely a desirable part of a tax adviser's job to inform a client of a significant and unexpected tax liability.

For both share schemes and employment tax specialists the need to deliver this news arises all too often where employers have failed to correctly apply the PAYE regulations and account for National Insurance on the exercise of share options or on other 'chargeable events'...

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