An employee share option scheme that is conditional on employees paying their PAYE liability should not be subject to a charge under section 222, a tax tribunal has ruled.
Benedict Manning – an employee of a UK subsidiary of a Swedish business - exercised an unapproved share option in 2007/08. He notified the employer and paid the option price, and awaited confirmation from his employer regarding the correct amount of PAYE to be reimbursed by him, as set out in the terms of the scheme.
About five months later the employer contacted him to arrange reimbursement of the PAYE, and this was done within a couple of weeks.
However, HMRC argued...