UK's Small Firms Face Deadline For New Reporting Requirement

by Robert Lee, Tax-News.com, London

09 June 2004

Owners of small firms in the United Kingdom now have less than one month to file a new reporting form with the Inland Revenue which requires them to declare their employees' private share schemes.

The new ‘Form 42’ applies to firms which incorporated between April 16 last year and April 5 this year. The form must reach the Revenue by July 7, or firms face fines of £300 for every undeclared employee share scheme.

Tax experts have warned that the smallest firms are most vulnerable to the new requirement, particularly as there appears to be a wide definition of what constitutes a ‘reportable event’, which could include the issue of new shares or changes in share values resulting from corporate restructuring.

However, Form 42 is likely to be most daunting to SMEs with a comparatively large number of employees on their payroll and will be especially tough coming on the back of recent tax changes to the small business sector, most notably the new 19% dividend tax on profits up to £50,000.

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