Completion of enquiry: closure notices

47 (1) An enquiry under paragraph 46(2) is completed when the Inland Revenue give the employer company a notice—

(a) informing the company that they have completed their enquiry, and

(b) stating their decision as to whether the requirements of this Schedule are met in relation to the option.

(2) If the Inland Revenue conclude that the requirements of this Schedule are not so met, they must also give notice of that decision to the person to whom the option has been granted.

(3) An enquiry under paragraph 46(3) is completed when the Inland Revenue give the individual concerned and the employer company a notice—

(a) informing the recipients that they have completed their enquiry, and

(b) stating their decision as to whether the requirement of paragraph 26 (commitment of working time) is met by that individual in relation to the option.

(4) References in the EMI code to a “closure notice” are to a notice under sub-paragraph (1) or (3).

(5) A closure notice takes effect when it is issued.

Completion of enquiry: application for closure notice to be given

48 (1) An application may be made under this paragraph for a direction requiring the Inland Revenue to give a closure notice within a specified period.

(2) The application may be made—

(a) by the employer company, or

(b) in a case within paragraph 46(3), by the individual concerned.

(3) The application must be made—

(a) to the General Commissioners, or

(b) if the applicant so elects (in accordance with section 46(1) of TMA 1970), to the Special Commissioners.

(4) The Commissioners hearing the application must hear and determine it in the same way as an appeal.

(5) Those Commissioners must give a direction unless they are satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.

Effect of enquiry

49 (1) If the Inland Revenue do not give a notice of enquiry, the requirements of this Schedule are taken to be met in relation to the option.

(2) If the Inland Revenue do give a notice of enquiry, their decision stated in the closure notice is conclusive as to whether the requirements of this Schedule are met in relation to the option.

(3) But this is subject—

(a) if their decision is that the requirements are not met, to the outcome of any appeal against that decision under paragraph 50;

(b) if their decision is that the requirements are met, to the outcome of any subsequent enquiry under paragraph 46(6) (enquiry arising from discovery of false or misleading information).

(4) This paragraph does not affect the provisions of sections 532 to 539 (which relate to disqualifying events).

Appeals

50 (1) The employer company may appeal against a decision of the Inland Revenue—

(a) that notice of the grant of the option was not given in accordance with paragraph 44, or

(b) that the requirements of this Schedule are not met in relation to the option.

(2) An individual may appeal against a decision of the Inland Revenue that the individual does not meet the requirement of paragraph 26 (commitment of working time).

(3) Notice of the appeal must be given to the Inland Revenue within 30 days after the date when the closure notice is given to the appellant.

(4) The appeal lies—

(a) to the General Commissioners, or

(b) if the employer company or individual so elects (in accordance with section 46(1) of TMA 1970), to the Special Commissioners.

Part 8 Supplementary provisions

Power to require information

51 (1) The Inland Revenue may by notice require a person to provide them with information—

(a) which they reasonably require for the performance of their functions under the EMI code, and

(b) which the person to whom the notice is addressed has or can reasonably obtain.

(2) The power conferred by this paragraph extends, in particular, to information to enable the Inland Revenue—

(a) to decide whether a share option is a qualifying option, or

(b) to determine the liability to tax, including capital gains tax, of any person who has been granted a qualifying option.

(3) The notice must require the information to be provided within a specified period, which must not end earlier than 3 months after the date when the notice is given.

Annual returns

52 (1) A company whose shares are subject to a qualifying option at any time during a tax year must deliver a return to the Inland Revenue.

(2) The return must—

(a) contain such information as the Inland Revenue may require, and

(b) be made before 7th July in the tax year following that to which it relates.

Compliance with time limits

53 (1) For the purposes of this Part and Part 7 a person is not to be regarded as having failed to do anything required to be done within a particular period of time if—

(a) the person had a reasonable excuse for not doing it within that period, and

(b) if the excuse ceased to exist, the person did it without unreasonable delay after the excuse ceased to exist.

(2) Where sub-paragraph (1)(b) applies, any further time limit running from the end of the period concerned is instead to run from the time when the thing in question was actually done.

Power to amend by Treasury order

54 (1) The Treasury may by order amend the EMI code—

(a) to make such amendments of paragraphs 13 to 23 (the trading activities requirement and related provisions) as they consider expedient;

(b) to substitute different sums of money for those for the time being specified in—

(i) paragraphs 5(1) and 6(1) and (3) (maximum entitlement of employee);

(ii) paragraph 12(1) and (2) (the gross assets requirement).

(2) An order under sub-paragraph (1)(b) which amends paragraphs 5(1) and 6(1) and (3) may amend section 536(1)(e) (other disqualifying events) so as to substitute the same sum for the one that is for the time being specified there.

Meaning of “market value” of shares

55 (1) For the purposes of the EMI code the “market value” of shares has the same meaning as it has for the purposes of TCGA 1992 by virtue of Part 8 of that Act.

(2) Sub-paragraph (1) is subject to paragraph 5(7) (valuation of shares subject to restriction or risk of forfeiture) as it applies for the purposes of any provision of the EMI code.

Determination of market value of shares

56 (1) This paragraph applies to the determination of the market value of shares for the purposes of the EMI code.

(2) Unless—

(a) it is agreed between the employer company and the Inland Revenue, or

(b) a reference is made under sub-paragraph (4),

the market value of shares is to be determined by the Inland Revenue.

(3) Where the market value of shares on any date needs to be determined for the purposes of the EMI code, the Inland Revenue and the employer company may agree that it is to be determined by reference to a date or dates, or to the average of the values on a number of dates, stated in the agreement.

(4) At any time before notice of the Inland Revenue’s determination has been given to the employer company, the company may give the Inland Revenue a notice requiring the question of the market value of the shares to be referred to the Commissioners.

(5) Any reference under sub-paragraph (4) must be made—

(a) to the General Commissioners, or

(b) if the applicant so elects (in accordance with section 46(1) of TMA 1970), to the Special Commissioners.

(6) The Commissioners to whom the reference is made must determine it in the same way as an appeal.

Appeal against determination of market value of shares

57 (1) The employer company may appeal against any determination by the Inland Revenue under paragraph 56.

(2) Notice of appeal must be given to the Inland Revenue within 30 days after the date when notice of their determination is given to the employer company.

(3) An appeal under this paragraph lies—

(a) to the General Commissioners, or

(b) if the applicant so elects (in accordance with section 46(1) of TMA 1970), to the Special Commissioners.

Minor definitions

58 In the EMI code—

• “arrangements” includes any scheme, agreement or understanding, whether it is legally enforceable or not;

• “company” means a body corporate;

• “group of companies” means a parent company and its 51% subsidiaries;

• “the group”, in relation to a parent company, means that company and its 51% subsidiaries;

• “parent company” means a company that has one or more 51% subsidiaries and “single company” means a company that does not;

• “research and development” has the meaning given by section 837A of ICTA;

• “shares” includes stock.

Index of defined expressions

59 In the EMI code the following expressions are defined or otherwise explained by the provisions indicated below: