One minute with Liz Hunter, partner at Mishcon de Reya.
If you could make one change to tax, what would it be?
I’m still revelling in the fact that we have finally managed to secure the long overdue changes to the company share option plan, which took effect in April 2023. I’ve been wanting those for about 20 years! In terms of what’s next on my wish list, I would have to say it is to reduce the maturity period of a share incentive plan (SIP) to three years (from five years). The ability to award free shares and provide a matching share award to a partnership share award under a SIP can potentially help facilitate meaningful social mobility for lower paid employees and I’d like to see this outcome from the recent call for evidence that HM Treasury held over the summer regarding the statutory all-employee share plans in the UK.
Has a recent tax case caught your eye?
The Supreme Court’s decision in Vermilion Holdings [2023] UKSC 37, ruling in favour of HMRC, is a very noteworthy case. The judgment clarifies that the legal fiction of the deeming provisions in the employment-related securities legislation can apply even if factually there was no intention for an issue of shares to be made because of an office or employment (i.e. the causal test is irrelevant). It is a landmark case and those that have placed reliance on the Court of Session ruling that was in favour of the taxpayer will now need to take updated advice and consider remedial action in relation to ERS returns and PAYE and NIC payment and reporting.
Has a recent change in HMRC practice affected your work?
HMRC’s updated guidance on use of discretion in relation to enterprise management incentives is certainly causing heightened focus in transaction due diligence. Boards should be alert to the fact that in some scenarios the use of discretion can trigger the loss of tax-advantaged status for the award regarding which a discretionary power has been used, most particularly if this accelerates the timing of exercise of an EMI option.
What do you know now that you wish you’d known at the start of your career?
Not all deadlines are real. At the start of your career, it can be very easy to think that every time someone says they need something by a specific date, that is a hard red line. Sometimes it is and sometimes it isn’t. Statutory filing deadlines are obviously important and (until the upcoming easement in 2024/25) notifying enterprise management incentive grants within 92 days is an example of a very real and time-critical deadline – as otherwise the tax advantages are lost. Other deadlines however are softer and there can be opportunity to push back and query whether the time sensitivity is essential or not. The Eisenhower Matrix, a quadrant in which you list urgent vs non-urgent and important vs not important tasks, can also be a useful way to navigate priorities.
Finally, you might not know this about me but...
I have a genetic predisposition for fraternal twins. I didn’t know this about me either until I was pregnant with my twin daughters. My paternal grandmother was a fraternal twin but as her partner twin died at birth, she was never talked about as being a twin. I only found out about that when I was sharing the news about my own twin pregnancy. My son was a toddler at the time and I can tell you that having a toddler and a set of newborn twins certainly forces you to function on very little sleep. It’s good preparation for working on intense deal transactions at all hours! My children are all in their late teens now and our professional services industry has come a long way meanwhile in supporting working parents – it is not an easy juggle.
One minute with Liz Hunter, partner at Mishcon de Reya.
If you could make one change to tax, what would it be?
I’m still revelling in the fact that we have finally managed to secure the long overdue changes to the company share option plan, which took effect in April 2023. I’ve been wanting those for about 20 years! In terms of what’s next on my wish list, I would have to say it is to reduce the maturity period of a share incentive plan (SIP) to three years (from five years). The ability to award free shares and provide a matching share award to a partnership share award under a SIP can potentially help facilitate meaningful social mobility for lower paid employees and I’d like to see this outcome from the recent call for evidence that HM Treasury held over the summer regarding the statutory all-employee share plans in the UK.
Has a recent tax case caught your eye?
The Supreme Court’s decision in Vermilion Holdings [2023] UKSC 37, ruling in favour of HMRC, is a very noteworthy case. The judgment clarifies that the legal fiction of the deeming provisions in the employment-related securities legislation can apply even if factually there was no intention for an issue of shares to be made because of an office or employment (i.e. the causal test is irrelevant). It is a landmark case and those that have placed reliance on the Court of Session ruling that was in favour of the taxpayer will now need to take updated advice and consider remedial action in relation to ERS returns and PAYE and NIC payment and reporting.
Has a recent change in HMRC practice affected your work?
HMRC’s updated guidance on use of discretion in relation to enterprise management incentives is certainly causing heightened focus in transaction due diligence. Boards should be alert to the fact that in some scenarios the use of discretion can trigger the loss of tax-advantaged status for the award regarding which a discretionary power has been used, most particularly if this accelerates the timing of exercise of an EMI option.
What do you know now that you wish you’d known at the start of your career?
Not all deadlines are real. At the start of your career, it can be very easy to think that every time someone says they need something by a specific date, that is a hard red line. Sometimes it is and sometimes it isn’t. Statutory filing deadlines are obviously important and (until the upcoming easement in 2024/25) notifying enterprise management incentive grants within 92 days is an example of a very real and time-critical deadline – as otherwise the tax advantages are lost. Other deadlines however are softer and there can be opportunity to push back and query whether the time sensitivity is essential or not. The Eisenhower Matrix, a quadrant in which you list urgent vs non-urgent and important vs not important tasks, can also be a useful way to navigate priorities.
Finally, you might not know this about me but...
I have a genetic predisposition for fraternal twins. I didn’t know this about me either until I was pregnant with my twin daughters. My paternal grandmother was a fraternal twin but as her partner twin died at birth, she was never talked about as being a twin. I only found out about that when I was sharing the news about my own twin pregnancy. My son was a toddler at the time and I can tell you that having a toddler and a set of newborn twins certainly forces you to function on very little sleep. It’s good preparation for working on intense deal transactions at all hours! My children are all in their late teens now and our professional services industry has come a long way meanwhile in supporting working parents – it is not an easy juggle.
