Last week we reported that HMRC had issued updated guidance on the different types of tax advantaged pension schemes.
HMRC have now produced another revised guide setting out the penalties for non-compliance.
The Schemes potentially liable for penalties are:
Share Incentive Plan (SIP), Save As You Earn option scheme (SAYE), Company Share Option Plan (CSOP) and Enterprise Management Incentives (EMI).So, how are the penalties calculated?
The penalty depends on the severity of the error, HMRC divide the errors into ‘serious’ or ‘less serious’.
Serious - a fundamental or material error in the plan rules or in the way in which the plan is operated’. Less serious - an error that can be put right by amending or repairing the plan rules’.The penalties may be reduced by:
100% for unprompted disclosures – the employer discovers an error and notifies HMRC before HMRC discover the error themselves. It is worthwhile noting that an employer disclosure after they have been advised of a possible check would count as prompted. The penalties for serious errors are charged as a percentage on the tax and National Insurance Contributions (NICs) relief given or due on options granted to employees. This can be doubled by HMRC. 50% for prompted disclosures No reduction - in the case of no disclosure.The factsheet on penalties can be found here.
