Finance Act 2000

Part I Introductory

Qualifying options

1 (1) In this Schedule a “qualifying option” means an option—

(a) in relation to which the requirements of this Schedule are met at the time the option is granted, and

(b) of which notice is given to the Inland Revenue in accordance with paragraph 2.

(2) The requirements of this Schedule are—

(a) the general requirements in Part II of this Schedule,

(b) that the company whose shares are the subject of the option is a qualifying company (see Part III of this Schedule),

(c) that the individual to whom the option is granted is an eligible employee in relation to that company (see Part IV of this Schedule),

(d) that the option is granted to the employee by reason of his employment—

(i) with that company, or

(ii) if that company is a parent company, with that company or another group company, and

(e) the requirements of Part V of this Schedule as to the terms of the option, the circumstances in which it is granted and other matters.

(3) In this Schedule, in relation to an option—

(a) references to “the relevant company” are to the company whose shares are the subject of the option, and

(b) references to “the employer company” are to the company by reference to which the requirement in sub-paragraph (2)(d) is met.

Notice of option to be given to Inland Revenue

2 (1) For an option to be a qualifying option notice of the option must be given to the Inland Revenue within 30 days after the grant of the option.

(2) The notice must—

(a) be given by the employer company, and

(b) be in a form required or authorised by the Inland Revenue.

(3) The notice must contain, or be supported by, such information as the Inland Revenue may require for the purpose of determining whether the requirements of this Schedule are met.

(4) The notice must also contain—

(a) a declaration by a director, or the secretary, of the employer company—

(i) that in his opinion the requirements of this Schedule are met in relation to the option, and

(ii) that the information provided is to the best of his knowledge correct and complete, and

(b) a declaration by the individual to whom the option was granted that he meets the requirement of paragraph 29 (commitment of working time) in relation to the option.

Correction of notice by Revenue

3 (1) The Inland Revenue may amend a notice given under paragraph 2 so as to correct obvious errors or omissions in the notice.

(2) A correction under this paragraph is made by notice to the employer company.

(3) No such correction may be made more than nine months after the day on which the notice under paragraph 2 was given to the Inland Revenue.

(4) A correction under this paragraph is of no effect if the employer company within three months from the date of issue of the notice of correction gives notice rejecting the correction.

Notice of enquiry

4 (1) The Inland Revenue may enquire into an option of which notice is given under paragraph 2 if they give notice to the employer company of their intention to do so in accordance with this paragraph.

(2) Where notice is given under paragraph 2, the Inland Revenue may enquire into whether paragraph 29 (commitment of working time) is met by the individual to whom the option was granted if they give him notice of their intention to do so in accordance with this paragraph.

(3) The Inland Revenue shall give a copy of any notice under sub-paragraph (2) to the employer company.

(4) Notice of enquiry may be given at any time within the period of 12 months beginning with the end of the period of 30 days mentioned in paragraph 2(1) (the period within which notice under that paragraph must be given).

(5) Notice of enquiry may be given at any time if the Inland Revenue discover that any of the information provided in or in connection with the notice under paragraph 2 was false or misleading in a material particular.

(6) An option that has been the subject of one notice of enquiry under sub-paragraph (1) or (2) may not be the subject of another notice under the same sub-paragraph, unless it is given by virtue of sub-paragraph (5).

Completion of enquiry

5 (1) An enquiry under paragraph 4(1) is completed when the Inland Revenue by notice inform the employer company that they have completed their enquiry and state their decision whether the requirements of this Schedule are met in relation to the option.

(2) If the Inland Revenue conclude that the requirements of this Schedule are not met, they must also give notice of that decision to the individual to whom the option was granted.

(3) An enquiry under paragraph 4(2) is completed when the Inland Revenue by notice inform the individual concerned and the employer company that they have completed their enquiry and state their decision whether the requirement of paragraph 29 (commitment of working time) is met by that individual in relation to the option.

(4) References in this Part to a “closure notice” are to a notice under sub-paragraph (1) or (3).

(5) A closure notice takes effect when it is issued.

(6) An application may be made by—

(a) the employer company, or

(b) in a case within paragraph 4(2), the individual concerned,

for a direction that the Inland Revenue give a closure notice within a specified period.

(7) An application under sub-paragraph (6) must be made to the General Commissioners or, if the applicant so elects (in accordance with section 46(1) of the [1970 c. 9.] Taxes Management Act 1970), to the Special Commissioners.

(8) Any such application shall be heard and determined in the same way as an appeal.

(9) The Commissioners hearing the application shall give a direction unless they are satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.

Effect of enquiry

6 (1) If the Inland Revenue do not give notice of enquiry, the requirements of this Schedule are taken to be met in relation to the option.

(2) If the Inland Revenue do give notice of enquiry, their decision stated in the closure notice is conclusive as to whether the requirements of this Schedule are met in relation to the option, subject—

(a) if their decision is that the requirements are not met, to the outcome of any appeal against that decision;

(b) if their decision is that the requirements are met, to the outcome of any further enquiry under paragraph 4(5) (enquiry arising from discovery of false or misleading information).

(3) This paragraph does not affect the provisions of paragraphs 47 to 53 (which relate to disqualifying events).

Appeals

7 (1) The employer company may appeal against a decision of the Inland Revenue—

(a) that notice of the grant of the option was not given in accordance with paragraph 2, or

(b) that the requirements of this Schedule are not met in relation to the option.

(2) An individual may appeal against a decision of the Inland Revenue that he does not meet the requirement of paragraph 29 (commitment of working time).

(3) Notice of the appeal must be given to the Inland Revenue within 30 days after the closure notice is given to the employer company or individual.

(4) The appeal lies to the General Commissioners or, if the employer company or individual so elects (in accordance with section 46(1) of the [1970 c. 9.] Taxes Management Act 1970), to the Special Commissioners.