Small Business Disquiet over Form 42 as return deadline extended

The new Inland Revenue return for reporting securities under unapproved share schemes is Form 42.

Form 42 is issued on or after the end of each tax year to employers known by the Revenue to operate unapproved share schemes. The usual deadline for completion is 7th July (unless it was issued after 8th June when it must be returned within 30 days).

As there have been some difficulties completing the form, the Revenue has 'kindly' extended the return deadline this year to 6th September.

"We have also been informed about problems with Form 42 with many practitioners saying they are unable to download and print the form from the website. In recognition of this we have decided to take a graduated approach to penalties where companies fail to make a report by 6th July this year."

"Many employers with employee share schemes were sent a copy of Form 42 shortly after 6th April 2004. Where a form has been issued, we expect it to be completed and returned within the statutory time period, i.e. by 6th July. However, for other cases, we will not take penalty proceedings, provided Form 42 is received by 6th September 2004. This additional period of two months will enable advisers to obtain a copy of Form 42 and advise their clients of their obligations leaving sufficient time to complete and return the form without risk of a penalty."

You can read the full Revenue Form 42 statement here.

Additionally, small business groups have condemned Form 42 recently, saying that the extra information requires that any share transactions between directors and employees must be declared to the tax collector under Form 42 compliance.

Chas Roy-Chowdhury, tax adviser to the Association of Certified Chartered Accountants, said: “Our understanding was that the form basically required information about share options. The information we now have is that is actually much wider.

“The object is to capture much more information that could be used to see whether there needs to be a change in the law covering husband and wife partnerships.”

For more details on small businesses' disquiet over Form 42, read this Contractor UK article.