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(5) Subsection (4) does not apply if P is, or is one of the persons who are,
the scheme administrator at any time before the relevant day.

(6) In relation to any liability falling within subsection (7), in section
272(4) references to trustees or to persons who control the
5management of the pension scheme do not include P.

(7) The liabilities falling within this subsection are—

(a) liabilities for the following in respect of payments made (or
treated as having been made) by the pension scheme on or
before the relevant day—

(i) 10the short service refund lump sum charge;

(ii) the serious ill-health lump sum charge;

(iii) the special lump sum death benefits charge;

(iv) the authorised surplus payments charge;

(v) the scheme sanction charge in respect of scheme
15chargeable payments falling within section 241(1)(a)
or (b);

(b) liabilities for the lifetime allowance charge in respect of
benefit crystallisation events occurring on or before the
relevant day;

(c) 20liabilities for the scheme sanction charge in respect of scheme
chargeable payments treated under section 185A or 185F as
having been made by the pension scheme in tax years earlier
than the one in which the relevant day falls;

(d) any liability for the scheme sanction charge in respect of the
25relevant fraction of any scheme chargeable payment treated
under section 185A as having been made by the pension
scheme in the tax year in which the relevant day falls;

(e) where the pension scheme is treated under section 185F as
having made a scheme chargeable payment in the tax year in
30which the relevant day falls and there is a relevant net gain,
any liability for the scheme sanction charge in respect of the
relevant amount;

(f) any liability to pay interest in respect of a liability mentioned
in paragraphs (a) to (e) arising at any time.

(8) 35For the purposes of subsection (7)(d) “the relevant fraction” is—


where—

  • A is the number of days in the tax year up to (and including) the
    relevant day, and

  • 40B is the number of days in the tax year.

(9) For the purposes of subsection (7)(e)

(a) there is a “relevant net gain” if—

(i) the total amount of any gains treated under section
185F as accruing in the tax year on or before the
45relevant day, exceeds

(ii) the total amount of any losses treated under section
185F as so accruing, and

(b) “the relevant amount” is—

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(i) the scheme chargeable payment, or

(ii) if that payment is greater than the excess of gains over
losses mentioned in paragraph (a), the amount of that
excess.

(10) 5Subsection (11) applies if—

(a) apart from that subsection, losses in relation to which section
185G(10) applies would be included in the total amount
mentioned in subsection (9)(a)(ii), and

(b) the losses exceed the gains—

(i) 10which are included in the total amount mentioned in
subsection (9)(a)(i), and

(ii) from which the losses can be deducted in accordance
with section 185G(10).

(11) The losses are not to be included in the total amount mentioned in
15subsection (9)(a)(ii) so far as they exceed the gains.

272B Liabilities of scheme administrator appointed by independent trustee
etc

(1) This section applies in relation to a person (“Q”) who is, or is one of
the persons who are, the scheme administrator of a registered
20pension scheme where Q’s appointment as such takes effect at a time
when the pension scheme has one or more independent trustees.

(2) Q does not assume any liability falling within section 272A(7) which
Q would otherwise assume.

(3) In relation to any liability falling within section 272A(7), in section
25272(4) references to persons who control the management of the
pension scheme do not include Q.

(4) Subsections (2) and (3) do not apply if Q is, or is one of the persons
who are, the scheme administrator at any time before the relevant
day.

(5) 30In this section, and in section 272A as it applies for the purposes of
this section, “the relevant day” means the first day on which the
pension scheme has an independent trustee (whether or not there are
days between that day and the day on which Q’s appointment takes
effect on which the pension scheme has no independent trustees).

272C 35 Former scheme administrator etc to retain liability

(1) This section applies in relation to a liability which, by reason of
section 272A(4), is not assumed by P (in which case “the relevant
day” is to be read in accordance with section 272A(3)).

(2) This section also applies in relation to a liability which, by reason of
40section 272B(2), is not assumed by Q (in which case “the relevant
day” is to be read in accordance with section 272B(5)).

(3) The liability is to be retained or assumed by the person who is, or the
persons who are, the scheme administrator immediately before the
relevant day (unless dead or having ceased to exist).

(4) 45If there is no scheme administrator immediately before the relevant
day, the liability is to be retained or assumed by the person who was,

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or the persons who were, the scheme administrator when there last
was a scheme administrator before the relevant day (unless dead or
having ceased to exist).

(5) Nothing in section 271 prevents a person from having (and
5continuing to have) the liability by reason of subsection (3) or (4).

(6) Subsection (7) applies if—

(a) no-one has the liability by reason of subsection (3) or (4),

(b) no-one who has the liability by reason of subsection (3) or (4)
can be traced, or

(c) 10the person who has, or all the persons who have, the liability
by reason of subsection (3) or (4) are in serious default (as
determined in accordance with section 272(6)).

(7) The liability is to be assumed by the person or persons determined in
accordance with section 272(4).

(8) 15Section 272(5) applies in relation to a person who assumes the
liability by reason of subsection (7) as it applies in relation to a person
who assumes a liability by reason of section 272.

(9) Nothing in this section prevents any person from being subject to the
liability apart from this section (in addition to any person who is
20subject to the liability by reason of this section), and in particular the
liability continues to be a liability of the scheme administrator for the
purposes of section 271(2).

(10) If a person assumes the liability under section 271(2) at a time after P
or Q’s appointment as, or as one of the persons who are, the scheme
25administrator has ceased, the person who has, or the persons who
have, the liability by reason of subsection (3) or (4) is, or are, released
from the liability.

(11) A person who has, or persons who have, the liability by reason of
subsection (3) or (4) may apply to an officer of Revenue and Customs
30to be released from the liability.

(12) Section 271(6) to (13) applies in relation to an application under
subsection (11) as it applies in relation to an application under
section 271(5).

20 In section 273 (members liable as scheme administrator) after subsection (1)
35insert—

(1A) This section also applies in relation to a registered pension scheme
if—

(a) a person has, or persons have, by reason of section 272C(7)
assumed a liability to pay tax (or interest on tax) by virtue of
40section 239 (scheme sanction charge) in respect of the whole
or a part of a scheme chargeable payment falling within
section 241(1)(b) or (c) made (or treated as having been made)
by the pension scheme,

(b) that person, or each of those persons, has failed (in whole or
45in part) to satisfy the liability, and

(c) that person, or each of those persons, has either died or
ceased to exist or is a person in whose case an officer of

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Revenue and Customs considers the person’s failure to
satisfy the liability to be of a serious nature.

21 (1) Section 274 (supplementary) is amended as follows.

(2) In subsection (1)—

(a) 5after “(trustees etc)” insert “, section 272C(7)”, and

(b) in paragraph (b) after “administrator)” insert “, section 272C(3) or
(4)”.

(3) In subsection (3)(b) after “272” insert “, 272C”.

22 Sections 272A to 272C of FA 2004 (as inserted by paragraph 19) have effect
10for cases where the relevant day falls on or after 1 September 2014.

Other provision

23 In the following provisions (which relate to the giving of information etc) for
“incorrect” (in all places) substitute “inaccurate”—

(a) section 169(5)(a)(ii);

(b) 15section 257(4)(a) and (b);

(c) section 261(1)(a);

(d) section 264(2)(a).

Section 48

SCHEDULE 6 Employee share schemes

20Part 1 Share incentive plans

Amendments to Chapter 6 of Part 7 of ITEPA 2003

1 Chapter 6 of Part 7 of ITEPA 2003 (employment income: income and
exemptions relating to securities: share incentive plans) is amended as
25follows.

2 In the title omit “Approved”.

3 (1) Section 488 (introduction to share incentive plans) is amended as follows.

(2) In the heading omit “Approved”.

(3) In subsection (1)—

(a) 30omit paragraph (a), and

(b) in paragraph (b) for “those plans” substitute “share incentive plans
(“SIPs”) which are Schedule 2 SIPs”.

(4) Omit subsection (2).

(5) In subsection (4)—

(a) 35omit the definitions of “approved” and “approval”, and

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(b) after the definition of “PAYE deduction” insert—

4 (1) Section 489 (operation of tax advantages) is amended as follows.

(2) 5In the heading for “approved” substitute “Schedule 2”.

(3) In subsection (1) for “an approved” substitute “a Schedule 2”.

5 In section 498 (no charge on shares ceasing to be subject to plan in certain
circumstances) in subsection (9)(b) for “an approved” substitute “a Schedule
2”.

6 (1) 10Section 500 (operation of tax charges) is amended as follows.

(2) In the heading for “approved” substitute “Schedule 2”.

(3) In subsection (1) for “an approved” substitute “a Schedule 2”.

7 In section 503 (charge on partnership share money) in subsection (2), in the
entry for paragraph 56, for “withdrawal of plan approval” substitute “plan
15ceasing to be a Schedule 2 SIP”.

8 (1) Section 506 (charge on partnership shares ceasing to be subject to plan) is
amended as follows.

(2) In subsection (2) for “market value of the shares at the exit date” substitute
“relevant amount”.

(3) 20After subsection (2) insert—

(2A) Subject to subsection (2B), in subsection (2) “the relevant amount”
means the market value of the shares at the exit date.

(2B) If the shares cease to be subject to the plan by virtue of a provision of
the kind mentioned in paragraph 43(2B) of Schedule 2 (provision
25requiring partnership shares to be offered for sale), in subsection (2)
“the relevant amount” means the lesser of—

(a) the amount of partnership share money used to acquire the
shares, and

(b) the market value of the shares at the time they are offered for
30sale.

(2C) Paragraph 92(2) of Schedule 2 (market value of shares subject to a
restriction) applies for the purposes of subsection (2B)(b).

(4) After subsection (3) insert—

(3A) If the shares cease to be subject to the plan by virtue of a provision of
35the kind mentioned in paragraph 43(2B) of Schedule 2, in subsection
(3)(b) the reference to the market value of the shares at the exit date
is to be read as a reference to the market value of the shares at the
time they are offered for sale (as determined in accordance with
paragraph 92(2) of Schedule 2 if relevant).

9 40In section 509 (modification of section 696) in subsection (1)(a) for “an
approved” substitute “a Schedule 2”.

10 In section 510 (payments by trustees) in subsection (1) for “an approved”
substitute “a Schedule 2”.

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11 In section 511 (deductions to be made by trustees) in subsection (1) for “an
approved” substitute “a Schedule 2”.

12 In section 515 (tax advantages and charges under other Acts) in subsection
(2)(a) and (d) for “an approved” substitute “a Schedule 2”.

13 5Schedule 2 is amended as follows.

14 In the title omit “Approved”.

15 In the cross-heading before paragraph 1 for “Approval of” substitute
Introduction to Schedule 2”.

16 (1) Paragraph 1 (introduction) is amended as follows.

(2) 10For sub-paragraphs (1) and (2) substitute—

(A1) For the purposes of the SIP code a share incentive plan (a “SIP”) is
a Schedule 2 SIP if the requirements of Parts 2 to 9 of this Schedule
are met in relation to the SIP.

(3) For sub-paragraph (4) substitute—

(4) 15Sub-paragraph (A1) is subject to Part 10 of this Schedule which—

(a) requires notice of a plan to be given to Her Majesty’s
Revenue and Customs (“HMRC”) in order for the plan to
be a Schedule 2 SIP (see paragraph 81A(1)),

(b) provides for a plan in relation to which such notice is given
20to be a Schedule 2 SIP (see paragraph 81A(4)), and

(c) gives power to HMRC to enquire into a plan and to decide
that the plan should not be a Schedule 2 SIP (see
paragraphs 81F to 81I).

17 In the cross-heading before paragraph 6 omit “for approval”.

18 (1) 25Paragraph 6 (general requirements for SIPs) is amended as follows.

(2) Make the existing text sub-paragraph (1).

(3) After the new sub-paragraph (1) insert—

(2) The requirements of this Part are also to be taken to include the
requirements of paragraphs 89 and 90 (plan termination notices
30etc).

19 (1) Paragraph 7 (the purpose of the plan) is amended as follows.

(2) In sub-paragraph (1)—

(a) after “provide” insert “, in accordance with this Schedule,”, and

(b) for “nature” substitute “form”.

(3) 35After sub-paragraph (1) insert—

(1A) The plan must not provide benefits to employees otherwise than
in accordance with this Schedule.

(1B) For example, the plan must not provide cash to employees as an
alternative to shares.

(1C) 40Sub-paragraph (1A) does not prohibit an employee receiving a
benefit from a company as a result of any shares in that company

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being held on the employee’s behalf under the plan where the
employee would have received the same benefit from the
company had the shares been acquired by the employee otherwise
than by virtue of the plan.

(4) 5Omit sub-paragraph (2).

20 In paragraph 18 (requirement not to participate in other SIPs) in sub-
paragraph (1) for “approved” substitute “Schedule 2”.

21 In paragraph 18A (participation in more than one connected SIP) in sub-
paragraph (1) for “approved” substitute “Schedule 2”.

22 10In paragraph 37 (holding period: power of participant to direct trustees) in
sub-paragraph (3)(b) for “an approved” substitute “a Schedule 2”.

23 In paragraph 43 (partnership shares: introduction) after sub-paragraph (2A)
insert—

(2B) Partnership shares may (notwithstanding sub-paragraph (2A) if
15relevant) be subject to provision requiring partnership shares
acquired on behalf of an employee to be offered for sale but only
if the requirement of sub-paragraph (2C) is met.

(2C) The consideration at which the shares are required to be offered
for sale must be at least equal to—

(a) 20the amount of partnership share money applied in
acquiring the shares on behalf of the employee, or

(b) if lower, the market value of the shares at the time they are
offered for sale.

24 In the cross-heading before paragraph 56 for “withdrawal of approval
25substitute “plan ceasing to be a Schedule 2 SIP”.

25 (1) Paragraph 56 (repayment of partnership share money) is amended as
follows.

(2) In sub-paragraph (1) for “approval of the plan is withdrawn (see paragraph
83)” substitute “plan is not to be a Schedule 2 SIP by virtue of paragraph 81H
30or 81I”.

(3) In sub-paragraph (2) for the words from “notice” to the end substitute “the
relevant day”.

(4) After sub-paragraph (2) insert—

(2A) If the plan is not to be a Schedule 2 SIP by virtue of paragraph 81H,
35in sub-paragraph (2) “the relevant day” means—

(a) the last day of the period in which notice of an appeal
under paragraph 81K(2)(a) may be given, or

(b) if notice of such an appeal is given, the day on which the
appeal is determined or withdrawn.

(2B) 40If the plan is not to be a Schedule 2 SIP by virtue of paragraph 81I,
in sub-paragraph (2) “the relevant day” means—

(a) the last day of the period in which notice of an appeal
under paragraph 81K(3) may be given, or

(b) if notice of such an appeal is given, the day on which the
45appeal is determined or withdrawn.

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26 (1) Paragraph 65 (general requirements as to dividend shares) is amended as
follows.

(2) Make the existing text sub-paragraph (1).

(3) After the new sub-paragraph (1) insert—

(2) 5Dividend shares may (notwithstanding sub-paragraph (1)(b) if
relevant) be subject to provision requiring dividend shares
acquired on behalf of an employee to be offered for sale but only
if the requirement of sub-paragraph (3) is met.

(3) The consideration at which the shares are required to be offered
10for sale must be at least equal to—

(a) the amount of the cash dividends applied in acquiring the
shares on behalf of the employee, or

(b) if lower, the market value of the shares at the time they are
offered for sale.

27 15In paragraph 71A (duty to monitor participants) for “approved” substitute
“Schedule 2”.

28 For Part 10 substitute—

Part 10 Notification of plans, annual returns and enquiries
81A 20Notice of SIP to be given to HMRC

(1) For a SIP to be a Schedule 2 SIP, notice of the SIP must be given to
Her Majesty’s Revenue and Customs (“HMRC”).

(2) The notice must—

(a) be given by the company,

(b) 25contain, or be accompanied by, such information as HMRC
may require, and

(c) contain a declaration within sub-paragraph (3) made by
such persons as HMRC may require.

(3) A declaration within this sub-paragraph is a declaration—

(a) 30that the requirements of Parts 2 to 9 of this Schedule are
met in relation to the SIP, and

(b) if the declaration is made after the first date on which
awards of shares are made under the SIP (“the first award
date”), that those requirements—

(i) 35were met in relation to those awards of shares, and

(ii) have otherwise been met in relation to the SIP at all
times on or after the first award date when shares
appropriated to, or acquired on behalf of,
individuals under the SIP have been held under the
40SIP.

(4) If notice is given under this paragraph in relation to a SIP, for the
purposes of the SIP code the SIP is to be a Schedule 2 SIP at all
times on and after the relevant date (but not before that date).

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(5) But if the notice is given after the initial notification deadline, the
SIP is to be a Schedule 2 SIP only from the beginning of the
relevant tax year.

(6) For the purposes of this Part—

(7) Sub-paragraph (4) is subject to the following paragraphs of this
Part.

81B Annual returns

(1) 20This paragraph applies if notice is given in relation to a SIP under
paragraph 81A.

(2) The company must give to HMRC a return for the tax year in
which the relevant date falls and for each subsequent tax year
(subject to sub-paragraph (9)).

(3) 25If paragraph 81A(5) applies in relation to the SIP, in sub-
paragraph (2) the reference to the tax year in which the relevant
date falls is to be read as a reference to the relevant tax year.

(4) A return for a tax year must—

(a) contain, or be accompanied by, such information as HMRC
30may require, and

(b) be given on or before 6 July in the following tax year.

(5) The information which may be required under sub-paragraph
(4)(a) includes (in particular) information to enable HMRC to
determine the liability to tax, including capital gains tax, of—

(a) 35any person who has participated in the SIP, or

(b) any other person whose liability to tax the operation of the
SIP is relevant to.

(6) If during a tax year an alteration is made in a key feature of—

(a) the SIP, or

(b) 40the plan trust,

the return for the tax year must contain a declaration within sub-
paragraph (7) made by such persons as HMRC may require.

(7) A declaration within this sub-paragraph is a declaration that the
alteration has not caused the requirements of Parts 2 to 9 of this
45Schedule not to be met in relation to the SIP.

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(8) For the purposes of sub-paragraph (6) a “key feature” of a SIP or
plan trust is a provision of the SIP or plan trust which is necessary
in order for the requirements of Parts 2 to 9 of this Schedule to be
met in relation to the SIP.

(9) 5A return is not required for any tax year following that in which
the termination condition is met in relation to the SIP.

(10) For the purposes of this Part “the termination condition” is met in
relation to a SIP when—

(a) a plan termination notice has been issued in relation to it
10under paragraph 89, and

(b) all the requirements under paragraphs 56(3), 68(4)(c) and
90 have been met by the trustees.

(11) If the company becomes aware that—

(a) anything which should have been included in, or should
15have accompanied, a return for a tax year was not included
in, or did not accompany, the return,

(b) anything which should not have been included in, or
should not have accompanied, a return for a tax year was
included in, or accompanied, the return, or

(c) 20any other error or inaccuracy has occurred in relation to a
return for a tax year,

the company must give an amended return correcting the position
to HMRC without delay.

(1) This paragraph applies if the company fails to give a return for a
25tax year (containing, or accompanied by, all required information
and declarations) on or before the date mentioned in paragraph
81B(4)(b) (“the date for delivery”).

(2) The company is liable for a penalty of £100.

(3) If the company’s failure continues after the end of the period of 3
30months beginning with the date for delivery, the company is liable
for a further penalty of £300.

(4) If the company’s failure continues after the end of the period of 6
months beginning with the date for delivery, the company is liable
for a further penalty of £300.

(5) 35The company is liable for a further penalty under this sub-
paragraph if—

(a) the company’s failure continues after the end of the period
of 9 months beginning with the date for delivery,

(b) HMRC decide that such a penalty should be payable, and

(c) 40HMRC give notice to the company specifying the period in
respect of which the penalty is payable.

(The company may be liable for more than one penalty under this
sub-paragraph.)

(6) The penalty under sub-paragraph (5) is £10 for each day that the
45failure continues during the period specified in the notice under
sub-paragraph (5)(c).

(7) The period specified in the notice under sub-paragraph (5)(c)

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