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Form 42

Form 42

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I have a few Q's regarding Form 42's (not dealt with these before):

Do they just relate to an issue of shares by a company and not transfers between individuals?

Does it just relate to Directors and employee's?

If the company does not have a payroll scheme set up, do you need to set one up to file the form 42?

If a share issue is exempt because it falls under the 'family rules' does it still need to be included on the form?

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By BKD
12th May 2015 18:48

Answers

No

No

Yes

No

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By jon_griffey
12th May 2015 19:06

There must be a better way...

This is really annoying.

- Having to register a PAYE scheme just to file Form 42 - even though there is nothing of consequence to report.

- The client then having to register for online services and register for online filing of form 42 and then authorise the agent.

- having to complete and upload that spreadsheet.where no tax is due.

 

 

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By BKD
12th May 2015 19:26

Annoying indeed

The better way ...

... is to scrap "Form 42"

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By ireallyshouldknowthisbut
13th May 2015 09:35

.

And the penalties for not filing in a form 42 only arise IF ISSUED

Or in other words, if not asked, you don't complete.

Has anyone ever actually been asked to fill one in?

Last time i asked not a single accountant had been requested to do so by HMRC.

 

 

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By BKD
13th May 2015 10:00

We (our clients) have indeed been asked

From memory, only one notice was 'unsolicited', the others being issued as a consequence of having filed previously. The problem with the new system is that once the 'scheme' has been registered the company will find itself having to file a return every year - unless and until there is a way of de-registering the scheme. In the vast majority of cases reportable events will happen relatively rarely and the old system accommodated this, with HMRC agreeing not to issue notices in the future.

For what it's worth, I don't agree with the "if not asked, you don't complete" approach - if an event is reportable, it is reportable. But HMRC cannot be expected to know if such an event has occurred. An even worse solution would be for HMRC to ask every company to file a return every year just in case. The system should allow companies to file a return for a year where there are reportable events but file nothing where there are none (though in practice, it really isn't that much of an issue to file a nil return).

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By ireallyshouldknowthisbut
13th May 2015 10:29

.

@BKD, but you are only getting them as you are filing them.

As you point out HMRC don't know about the events, so don't know to ask. Its only if you volunteer to put yourself in the form 42 cycle that you get caught up in it.  

Are you trying to say that HMRC ask for one for all the companies you set up?

 

 

 

 

 

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By jon_griffey
13th May 2015 10:55

A bit like P11D's

This reminds me of P11D's. 

Do you do the right thing and complete P11D's to report travel etc and then send in the s336 claim to claim a deduction for the whole lot, and then spend time dealing with the incorrect coding notices that result?  Or like most do you ignore the whole process because nobody actually cares?

Will HMRC actually care that form 42 is not filed to report a non taxable share movement?

There needs to be a better mechanism as I would guess that 90%+ of matters reportable on form 42 fall into this category.

 

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By BKD
13th May 2015 11:07

You've misunderstood me, ireally...

What I said was (and I thought that it was clear) was that only 1 company of which I am aware received a notice to file a return without having previously filed one. The rest, as you (and I) say, have been issued as a result of previous filings.

I don't know where you get the suggestion that HMRC ask for one for all companies from.

You suggest that one is only caught up if one 'volunteers' to put oneself in the cycle. That may well be the case but it's no excuse for breaking the law. If a reportable event has occurred, then it is reportable, whether or not a notice to file is issued. It's exactly the same with SA - how do HMRC know that someone has commenced self-employment - or are you suggesting that a person should not 'volunteer' to be put into the SA cycle until such time that HMRC find out and decide to issue a notice to file?

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By ireallyshouldknowthisbut
13th May 2015 12:23

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@jon, exactly like P11Ds. And box 8 on the VAT return, you don't fill that in for fun either.

@BKD, you have made my point exactly.  The one you have been asked to do, you have little choice. The rest of them was a choice you have made to 'enter the ring' and its hard to get out.

Just because something happens to be the law, does not mean you have to do it.  

If HMRC were serious about this form, they would enforce it. 

SA is not comparable, there is a tax liability that needs to be paid.  But as for notification, no-one cares so long as the return is filed and the tax paid.

This is just data collection, which if you fill it in, if anything makes you a target for enquiry. 

 

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By BKD
13th May 2015 13:21

Hobson's choice

ireallyshouldknowthisbut wrote:

@jon, exactly like P11Ds. And box 8 on the VAT return, you don't fill that in for fun either.

@BKD, you have made my point exactly.  The one you have been asked to do, you have little choice. The rest of them was a choice you have made to 'enter the ring' and its hard to get out.

Just because something happens to be the law, does not mean you have to do it.  

 

Just because something happens to be the law, does not mean you have to do it.

I suppose that is correct, provided that you and your clients are prepared for the consequences. Just because HMRC have so far shown an unwillingness to raise penalties doesn't mean that they won't in future.

As a member of three professional bodies, I prefer (and am duty-bound) to advise my clients so that they are compliant with relevant legislation. If others are prepared to take a more relaxed view, so be it.

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By Jigs
14th May 2015 08:13

Many thanks for your replies - regarding point 2 - does it just relate to employee's and Directors, you have answered no, is this because it can also relate to connected parties of employee's which would then be taxed on the employee? Or am I missing something?

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By BKD
14th May 2015 08:22

Correct, Jigs

It applies to anyone that receives securities by reason of someone's employment - the obvious example being a spouse or other close releative of the employee.

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By The Minion
11th Jun 2015 12:38

sorry this is a late join but

i've been busy!

 

@BKD

The problem with the new system is that once the 'scheme' has been registered the company will find itself having to file a return every year - unless and until there is a way of de-registering the scheme

So that means once in always in even though the initial trigger event was a one off transaction years ago?

As Jon says download the spreadsheet, nothing to complete then submit, possibly having had to create a PAYE scheme in the process which then triggers a raft of compliance costs and penalty risks for not doing something else. 

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Nichola Ross Martin
By Nichola Ross Martin
11th Jun 2015 14:10

Can I just ask?

Has anyone else had problems with HMRC's templates for reporting ERS?

 

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