This is a 'heads up' for those of you with a limited company but without an accountant at this time. There is some new legislation out that carries a fine of £600 for non-compliance with a typical husband and wife company. The basic requirement is that you need to fill in this form here by the 6th July for any shares issued during 2003/4, including on incorporation. http://www.inlandrevenue.gov.uk/shareschemes/42-2004-q8-31.pdf The following is an extract from an email I have sent to my clients this evening: If people need some help with this then please let me know. I would be interested to here what other accountants are upto as i have just got back from Holiday and am still getting my head around the new rules. All, The following general email applies to ALL directors of limited companies that have had shares issued (including on incorporation) between 6th April 2003 and 5th April 2004 and is important. If you are receiving this email in error and you don’t have a limited company, please let me know and I will amend my mailing list. What Red Tape? Unfortunately our alleged red tape cutting chancellor has landed another own goal and invented a new form to be completed for limited companies that have issued shares in the 2003/4 tax year. This apparently applies to all new limited companies and those issuing additional shares in the tax year that may lead to the employment of the participants. I include some notes at the end about how we got here and why this deadline has suddenly appeared. Penalties are severe for non-compliance - £300 for each person the shares are issued to - ie £600 for a typical husband and wife operation. As this is a new regulation we don’t yet know if and how any fines will be applied, but can only assume they will be and the chancellor is looking to take a percentage of the £180 million in potential fines available for non-compliance of this new regulation. The form needs to be completed and returned by 6th July 2004, and as far as I can ascertain this includes dormant companies as well as live ones. I am trying to clarify this point as it seems perverse. If you have issued shares since 5th April 2004, this legislation may still apply but the deadline will be 6th July 2005. What I can do for you I can complete the forms for you, but as this is an additional piece of work over outside the scope of my standard engagement letter I will unfortunately need to charge for my time. I am offering to do these for a discounted fixed fee of £75 per company for existing clients with straight forward affairs. For this I will submit a form or substitute form on your behalf. Information I require per company: 1. Ltd company name and number 2. Name of each director/employee holding shares 3. NI number of the above person 4. Number of shares issued (on incorporation and subsequently) to each person 5. Date(s) of issue of shares 6. Price paid for shares 7. Nominal value of the shares (ie £1, 50p, 1p each etc) 8. If you are operating a PAYE system, your PAYE reference number, eg 951/W313YY Please post or email this information to me as soon as possible if you wish me to complete this return for you. If I don’t hold a 64-8 on your behalf (ie you are not a fully signed up client), I am obliged to perform additional money laundering checks (more red tape) before I can act for you. I will let you know about this individually. Completing the form yourself If you want to complete the form yourself it can be downloaded here: http://www.inlandrevenue.gov.uk/shareschemes/42-2004-q8-31.pdf There have been complaints from many people about being unable to print it out, which the IR oddly deny. I am able to print using Adobe Acrobat 6.0 professional. Apparently the IR are rationing stocks of the paper version of the form, normally a precursor to running out. The key section is 2a. If you are confused with it, then I would suggest the quickest thing would be to supply the information above and I will complete the form on your behalf. How we got here Some notes of how this situation arose in the first place. This has been a very frustrating episode. Apparently this new regulation was announced in March 2004 in a previously largely unknown booklet entitled “share focus” which few people in the profession where aware about until Grant Thornton made a press release highlighting it on the 7th June. Previous issues in this publication related to share schemes operating in large companies which is of little relevance to most small practitioners. The IR responded on the 17th June with a Q&A document confirming Grant Thornton where correct in their deductions that this applied to pretty much all the 300,000 new limited companies in the year. Since then the various professional bodies have been putting pressure on the IR to try some common sense and drop the requirement, or at least give a sensible deadline for compliance. A few days on and after considerable pressure from the profession on these rather modest pleas appear to have been ignored, hence my mail to you today with 2 weeks left to comply.
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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