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Grant of share option was employment related

09 June 2020
Issue: 4747 / Categories: Tax cases
CRC v Vermilion Holdings Ltd, Upper Tribunal (Tax and Chancery Chamber), 27 May 2020

In 2006, the taxpayer granted N share options as part of an equity raising exercise. These were in effect payment for advisory services instead of a fee. In 2007, the taxpayer was in financial difficulty so the 2006 option agreements were novated and new, less valuable, options issued to N who was appointed its chairman.

The issue was whether the 2007 option was an employment-related securities option within ITEPA 2003, s 471 – as contended by HMRC.

The First-tier Tribunal allowed the taxpayer’s appeal.

The Upper Tribunal decided the opportunity to acquire the 2007 share option was available by reason of employment and therefore s 471(1) was satisfied. The option had been granted to N to replace the previous one but was also as part of a rescue package which included N’s employment. The 2007 share option was an employment-related securities option.

HMRC’s appeal was allowed.

Issue: 4747 / Categories: Tax cases
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