Q: Help! My client exercised EMI options last month and I have just drawn up the election under s431 ITEPA 2003, to bring unrestricted market value (UMV) into account for tax on exercise, but apparently this should have been submitted within 14 days to be effective. I know it doesn't affect the liability on exercise, but the shares are restricted and will leap in value when the restriction is lifted in three years time. My client is (to say the least) upset with me. Will HMRC accept it was my ignorance and allow a late election, or should I prepare my insurers for the worst?
A: Not to worry! Where the share issue relates to qualifying EMI shares, ITEPA 2003, s431A now assumes an automatic election for UMV, so no income tax charge could subsequently arise on the lifting of the restriction.