HM Revenue & Customs’ Shares and Assets Valuation team have announced that they are to withdraw the currently available (but informal) service for both PAYE Health Checks and ITEPA Post Transaction Valuation Checks (PTVCs) with effect from 31 March 2016. Any valuations received after that date will not be processed.
It is common to seek a PTVC when awards are made under a new employee share plan, particularly if awards are over a growth share or other newly created class of share. Withdrawal of this service means an employee could face an enquiry into their tax return and a potential unexpected tax bill well over two years after the award date. This could undermine the incentive effect of a new share plan.
We understand that almost 90 percent of HMRC checks did not result in any change being made to the submitted valuation, despite requiring considerable HMRC resource. This is the rationale for withdrawing the service. The intention is for HMRC to publish updated guidance to help businesses determine the correct valuation, and at the same time to work internally to identify those cases where a review might be appropriate.
The valuation check service for HMRC tax-advantaged share plans and for Employee Shareholder Status awards will continue, although HMRC will examine the service to see if it can be improved. The existing process for CGT PTVCs will also continue.
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