PAYE dispute - restricted securities
I am looking for an expert to support my position regarding PAYE.
I am an employee of a NASDAQ-listed US company. I am UK resident and domiciled and am paid PAYE via a third-party UK payroll company. The company has no UK presence (other than me working from home).
In November last year, I benefited from several transactions in company share plans: stock option exercises and employee stock purchases. All transactions were taxed by my employer via PAYE.
My employer and I have different opinions on the amount of tax that I should pay on these transactions. As things stand, my employer used the same-day adjusted NASDAQ closing share price to calculate taxable gain. I think this is incorrect since the transactions took place during a trading blackout period - a time when employees are forbidden by insider-trading policies from buying or selling any shares. By my reading, quotes below, the shares were "restricted securities".
When the trading blackout was lifted, the open-market value of my acquired shares had fallen (by a few thousand dollars). I believe this lower valuation is the figure that should be used for computing net gain. I have raised this issue with my employer who has refused to adjust PAYE - and I don't think they have taken any expert UK tax advice.
I hope the above makes sense. Some questions for any experts who've taken the time to read my post:
- Is my understanding and application of the "restricted securities" regulations correct?
- If I am correct, what should I do next?
- Can someone here help me, and if so, how much would you charge?
"Employment-related securities, or interests in employment-related securities, are restricted if restrictions have been imposed directly or indirectly by any: contract, agreement, arrangement or condition, and the restrictions have an effect on the market value of the security."
"Typically, a US quoted company will have four ‘black-out periods’. These are periods during which employees are prohibited from dealing in their shares. This blocking period applies to all shares held by relevant employees rather than just to those shares acquired by reason of employment. It could be argued that the restriction that employees cannot sell during four periods would reduce the theoretical market value of the shares."
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