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Chancellor’s Autumn Statement: 3rd December 2014

There was little in the Autumn Statement specifically related to employee share schemes. Disappointingly, the government announced that it would not be taking forward the ideas propounded by the Office of Tax Simplification for establishing a new ‘employee shareholding vehicle’ (more widely referred to as a ‘safe harbour trust’), and also the idea of changing the tax point of the acquisition of non-marketable employment-related securities.

Both these ideas had been put out to ‘consultation’ but, it seems, the relatively small number of positive responses received from businesses, as opposed to firms of advisers, persuaded the government that there was insufficient call for change when weighed against the difficulties of implementing such technical amendments with all the risks of opening up the possibilities of further opportunities for tax avoidance.

If the decisions were, as suggested, based solely on the lack of responses from companies, as opposed to their advisers, this would be regrettable, and illogical: it is hardly surprising that, in relation to such highly technical and complex areas of tax law, companies which have encountered barriers to entering into perfectly sensible and commercial arrangements cannot reasonably be expected to be aware of all the details of how and why it is that there is a problem. Typically they rely upon their advisers to be aware of the detail. However, it seems that the informed opinions of specialist advisers carries less weight in government than those of companies…..

In its summary of responses to the Consultation on the ‘employee shareholding vehicle’, HMRC has stated that:

  • as regards the current differences in CGT treatment of UK and offshore trusts : “the government will keep this under review”
  • as regards stamp duty/SDRT exemptions for disposals of shares by employees’ trusts : the government is “open to any further views from stakeholders”
  • as regards a ‘qualifying tax-advantaged plans’ for companies under the control of a non-EOT trust : “this is to be kept under review”
  • as regards ‘loans to participators’ : “the government [cannot] address this…. Because of the opportunities for tax avoidance”
  • as regards a possible exemption from the ‘disguised remuneration’ rules: “the government does not propose to revisit this”.

That said, the Government is however still prepared to ”consider opportunities to reduce burdens on those businesses wishing to use EBTs in a straightforward and simple manner”.