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In 2006 Vermilion Holdings Ltd granted an option to Quest Advantage Ltd – which was owned by Mr Noble and one other - to acquire shares in Vermilion. In July 2007 the companies entered into a new option agreement under which Quest subscribed for a new class of shares in Vermilion and the 2006 option expired. In 2016 Quest transferred the 2007 option to Mr Noble.
The key question was whether Vermilion conferred the 2007 option on Mr Noble while it was his employer. Vermilion claimed it had not and the transfer was therefore subject to capital gains tax. HMRC disagreed saying it was an employment-related securities option within ITEPA 2003 s 471 on the basis it had been granted to Mr Noble because of his employment as a director of Quest.
Allowing the taxpayer’s appeal the First-tier Tribunal found an option...
