Demand for my expertise! In quarter one, I predominantly advised VC-backed companies looking to maximise the eventual returns to founders and employees with tax-advantageous EMI option plans and CSOPs playing a key role. This quarter, more private companies are making significant investments, while public companies are becoming more active again.
If you could make one change to tax, what would it be?
Simplifying tax laws around incentives. Currently the general outcome is tax-advantaged treatment for the management of private companies and non-tax advantaged treatment for the management of public companies (shareholders don’t favour tax breaks for those considered well-paid). A blanket law to effect the same outcome would seem fairer and simpler.
What do you know now that you wish you’d known at the start of your career?
Clients don’t want to talk business at events; they want to talk to people. Be yourself and the rest will flow from there.
Are there any new rules that are causing a particular problem in practice?
Although HMRC emphasises that their updated guidance on blanket discretions in EMI option plans is not a change in the law, in practice, many companies granted such options on the previous understanding that those options could be exercised on a tax-advantaged basis as a result of their board triggering a blanket exercise discretion (which is not the case). As a result, long-standing option holders who, for example, are offered the opportunity of an early payout on a secondary in reliance on such a blanket discretion trigger event are being left with the choice of exercising with an unexpected tax bill of up to 60.8% (instead of the expected 10%) or waiting for a specified exercise trigger to occur (which could be years down the line, if ever).
Has there been a recent change in HMRC practice which has impacted your work?
Despite a slight improvement in response times, the advertised 10-14 day turnaround time for HMRC valuations is often exceeded, leaving clients in limbo. They worry about delaying grants hoping a valuation agreement can provide greater tax certainty, while weighing up potentially unexpected events affecting the low share prices needed for the best tax outcomes.
What development should we look out for later this year?
The new EMI option notification process: the 92-day grant notification window is gone, everything turns on the annual share plan report now.
Finally, you might not know this about me but…
I grew up on the Isle of Man, where I learnt bobbin lace-making and won a number of national competitions with my creations. Years later, I started the Cambridge University Bobbin Lace-Making Club to encourage like-minded crafters to expand their repertoire and enjoy some well deserved mindfulness and me-time.
Demand for my expertise! In quarter one, I predominantly advised VC-backed companies looking to maximise the eventual returns to founders and employees with tax-advantageous EMI option plans and CSOPs playing a key role. This quarter, more private companies are making significant investments, while public companies are becoming more active again.
If you could make one change to tax, what would it be?
Simplifying tax laws around incentives. Currently the general outcome is tax-advantaged treatment for the management of private companies and non-tax advantaged treatment for the management of public companies (shareholders don’t favour tax breaks for those considered well-paid). A blanket law to effect the same outcome would seem fairer and simpler.
What do you know now that you wish you’d known at the start of your career?
Clients don’t want to talk business at events; they want to talk to people. Be yourself and the rest will flow from there.
Are there any new rules that are causing a particular problem in practice?
Although HMRC emphasises that their updated guidance on blanket discretions in EMI option plans is not a change in the law, in practice, many companies granted such options on the previous understanding that those options could be exercised on a tax-advantaged basis as a result of their board triggering a blanket exercise discretion (which is not the case). As a result, long-standing option holders who, for example, are offered the opportunity of an early payout on a secondary in reliance on such a blanket discretion trigger event are being left with the choice of exercising with an unexpected tax bill of up to 60.8% (instead of the expected 10%) or waiting for a specified exercise trigger to occur (which could be years down the line, if ever).
Has there been a recent change in HMRC practice which has impacted your work?
Despite a slight improvement in response times, the advertised 10-14 day turnaround time for HMRC valuations is often exceeded, leaving clients in limbo. They worry about delaying grants hoping a valuation agreement can provide greater tax certainty, while weighing up potentially unexpected events affecting the low share prices needed for the best tax outcomes.
What development should we look out for later this year?
The new EMI option notification process: the 92-day grant notification window is gone, everything turns on the annual share plan report now.
Finally, you might not know this about me but…
I grew up on the Isle of Man, where I learnt bobbin lace-making and won a number of national competitions with my creations. Years later, I started the Cambridge University Bobbin Lace-Making Club to encourage like-minded crafters to expand their repertoire and enjoy some well deserved mindfulness and me-time.
