There are generally 2 reporting events when it comes to EMI options:
- EMI Notifications - whereby the company must notify HMRC of any grants made by the 6th of July following the end of the tax year in which the option is granted, and
- EMI Annual Returns - whereby the company must submit an annual return by 6th July each year to confirm whether there have been any changes in the grants made (i.e options were exercised, cancelled or lapsed)
In both cases, these reporting events are carried out via HMRC’s portal directly.
If any errors have been made in the EMI annual return for a particular tax year HMRC requires that you submit another return as soon as possible to override the previous one. This is generally straightforward.
If you have made what HMRC consider to be a “significant” error in your reported EMI notifications however the process is slightly different. You must notify HMRC of the errors by submitting a ‘reasonable excuse’ claim within 9 months of the original notification. Examples of a significant include reporting the wrong number of shares under option, or stating the price of the shares incorrectly. The onus is on the company to satisfy HMRC that they have a reasonable excuse and there is some guidance here from HMRC on how to establish if a reasonable excuse exists.
To correct a “significant” error you need to contact HMRC to get a “reasonable excuse code” before you can submit your updated EMI notification. This is by emailing shareschemes@hmrc.gov.uk and providing the following information for the reasonable excuse claim together with a copy of the EMI Valuation approval letter:
- date the options were granted;
- name of the company granting the options;
- the scheme name; and
- the unique scheme reference number (which will have been allocated by HMRC’s Employment Related Securities service when you first registered your EMI options).
HMRC will review the reasonable excuse claim, and if agreed they will allocate a reasonable excuse code, which you will need to enter online when re-notifying HMRC of the EMI options. You can find our guide on how to notify HMRC here.
Once you have submitted your updated EMI Nofication, please remember to take a screenshot of your submission confirmation for your own records and safekeeping..png?width=688&height=339&name=image%20(42).png)
Don’t forget to cancel the originally issued incorrect options when you complete and file your Employment Related Securities (ERS) annual return. You can find our guide on how to do an EMI Annual Return here.
This HMRC article explains how to make a reasonable excuse claim for a late EMI notification.
If you have any other questions hit the chat bubble or contact your scheme owner.