Readers’ forum: Employment ownership scheme

Following on from the article by Tom Klouda Paul Brown and Daniel Andreca ‘Envisage employee engagement’ (Taxation 10 December) which I read with interest I have two highly technical questions. I have received conflicting advice concerning employee ownership schemes (EOS) as I am currently thinking about selling my company into one. Over the years we have built up large cash reserves but in any ‘normal’ sense we are a trading company and meet all the other conditions. Is there any case or taxation law where HMRC has challenged whether a company is ‘trading’ as a result of it having large cash reserves?

My second question concerns look back periods and options. One of my employees was granted an enterprise management incentive (EMI) option over 10% of the share capital of the company which he is not allowed to exercise until next year. Since this...