The following updates from HMRC may be useful to you. If you are not able to meet your ERS tax obligations due to the coronavirus pandemic, HMRC may consider you have a reasonable excuse. HMRC has also provided some further guidance on EMI and furloughed employees - read more below:
1. Deadlines for registration of new schemes, filing of returns and notifying new EMI options
HMRC recognises that some employers and agents may struggle to meet ERS tax obligations due to the coronavirus pandemic. You should try to meet your obligations such as registering new schemes, filing returns and notifying new EMI options as soon as you can. However if you cannot, and this is due to the coronavirus pandemic, HMRC will consider that as a reasonable excuse for missing some tax obligations.
You should explain how you were affected by the coronavirus pandemic when you make your appeal. Refer to the latest guidance on disagreeing with a tax decision.
2. HMRC confirms furloughed employees are eligible for grant of EMI options
Back in July, we highlighted that HMRC had clarified there would be no disqualifying event resulting from an EMI option holder who was furloughed during the period beginning on 19 March 2020 for reasons related to the COVID-19.
HMRC has since gone further to confirm that if an employee would otherwise have met the working time requirement for EMI eligibility, but did not do so for reasons connected to the pandemic, the time which they would have spent working for the company will count towards their working time. The reasons that HMRC will accept are: furlough; working reduced hours; and unpaid leave. In all cases the reason must relate to the current pandemic, and relate to the period from 19 March 2020.
In addition, where EMI options are granted and some employees are on furlough, working reduced hours or on unpaid leave for reasons related to COVID-19, they must still be counted for the purposes of calculating the 250 FTE employee limit under the EMI rules.
Changes to legislation will be made in the current and next Finance Bill to reflect these confirmations from HMRC. Until then, the status of the confirmation from HMRC is not entirely clear, but employers should feel confident in relying on the guidance.
Further information, including examples of how these new rules work in practice can be found at HMRC's latest Employment Related Securities Bulletin.
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