CIOT applauds HMRC reduction of burden on small businesses The Chartered Institute of Taxation (CIOT) wholeheartedly welcomes the Chancellor’s revision of the rules on reporting the acquisition of shares relating to employments (Form 42) announced on 28 November.
These rules were introduced in 2003 as part of a package of anti-avoidance measures concerning ‘employment related securities’. But, unfortunately, HMRC maintained that founder shares in newly incorporated companies were also caught by the rules, leading to thousands of small businesses having to complete the Form when no loss of tax was at stake.
The CIOT objected to this unnecessary regulatory burden and also disputed whether founder shares were actually technically covered by the legislation. Following an article in the Financial Times in July this year, they also wrote an open letter to Sir David Arculus, Chairman of the Better Regulation Task Force, detailing their concerns.
The CIOT are therefore delighted that this regulatory burden has been removed.
Andrew Hubbard, Chairman of the Small Business Working Group said:
“The CIOT welcomes this announcement. We have always taken the view that Form 42 imposed compliance burdens on smaller companies that were completely out of proportion to any value the information could possibly have for HMRC. And in many cases the information was already available to HMRC via other forms or accounts supplied by these companies!
There is no doubt that there will be a saving to many businesses as a result of this revision to the reporting rules. It is good that HMRC have finally seen the light.”