Author: Amit Roy

Restricted Stock Unit

This article looks at the treatment of Restricted Stock Units (RSUs) in a self-assessment (SA) return on and after 6th April 2016.

This is a complex area; this article deals with the basics of RSUs.

RSUs are used by many US companies as long-term rewards linked to the share price of the company for employees.

There are two stages:

  • Grant of Option: Usually, no income tax liability arises at this stage.
  • Vesting of option: at this stage as employee actually receives shares at below market price, it is taxed as earnings* [Chargeable amount = MV of shares – consideration given, if any].

    *taxes payable income tax and national insurance both employee and employer.

    Usually, payroll department of the employer deals with the income tax via payroll. So, no further action required in SA return.

Capital Gains Tax

When shares acquired under RSU scheme are sold. Gains need to be computed and disclosed in SA return. Acquisition cost will be the MV of shares when RSU vested.

Further readings:
1. HMRC Manual ERSM20192 – 20194
2. Tolley Annual Income tax also has a good example in 70.17

Bonus
1. Some companies give cash bonus based on the share price, these are not RSUs they will be dealt via PAYE as normal bonus.

2. There are tax-advantaged employee share options as well like EMI, SAYE and CSOP we will cover them some other time.

Glossary

Grant Date – The date of agreement when employer promises to give shares in the future.

Vesting Date – The date on which employee becomes entitled to acquire shares after the fulfilment of pre-decided terms and conditions.

Exercise Date – The date on which the employee buys shares using the options.

Exercise Price – The price at which the employee gets the shares, usually lower than market value.

Postponement of VAT

Started 1 Jan 2021

Account for VAT on the VAT return rather than pay at Port.

No approval needed to start using it.

When making import declaration, select duty deferment account instead of immediate payment. Usually, businesses use freight forwarders to complete import paperwork, so just need to instruct the freight forwarding company via a simple email to start using VAT postponement.

All VAT deferred will be captured in Monthly postponed import VAT statement (MPIVS).

Businesses typically will have both C79s (from courier companies like UPS etc.) and MPIVS.

To get your C79s and MPIVS use link below:
Get your postponed import VAT statement – GOV.UK (www.gov.uk)

VAT Return

Box 1                    include VAT due on imports as shown on MPIVS

Box 4                    include VAT reclaimed, same figure as Box 1*

So net effect – NIL

Box 7                    include total value of all imports

*Input VAT will be restricted for exempt and partially exempt businesses.

Bonus

  • Import VAT is calculated by adding supplier invoice, freight and custom duty.
  • In Sage use T18 code when positing invoices where postponement used.

Why should I pay taxes?

Besides paying penalties, interest, criminal prosecution and reputational damage, I have listed a few reasons for paying taxes in full and on time:

The usual ones are:

1. Taxes fund public services like roads, NHS, schools, transport systems etc.

2. Keeps us safe by funding police, justice system and armed forces.

3. Safety net – helps people in case of job loss, sickness and old age.

4. Directs behaviour – like high taxes on cigarettes, alcohol and fuel duty.

5. Helps target resources towards disadvantaged areas by tax incentives.

6. Wealth distribution – transferring wealth from the wealthy to the needy. Prime example is inheritance tax, this ensures wealth is not perpetuated through generations and creates a more equal society.

Basically price of living in a civilized society. Reason a person is successful is the support system a civilized society provides them.

Now some novel ones, equally relevant:

7. Basis of fiat money – one of the main reasons of value of fiat money is that government accepts it for paying taxes. Fiat money enables the government to control the economy. To read more on the topic of fiat money go to Section 3 `The Return to the Gold Standard` of Essays in Persuasion by John Maynard Keynes, one of the most influential economists of 20th century.

8. Paying a fair share of taxes gives the taxpayer the moral authority to question lawmakers.

9. Basis of democracy. In historic times in England when kings wished to raise funds for their wars; they needed to call in Parliament to raise taxes. Parliament (especially the Commons) developed over the centuries giving universal franchise. This today gives us the right to chose who governs us and how.

But it is a social contract. People pay their taxes and governments govern them prudentially.

Often when governments become corrupt people are disinclined to pay taxes.

Thus, taxes keep peace and harmony and help create a better society.

Unexpected accountants

Below is a list of unexpected individuals who were accountants.

  • Chitragupta – According to Hindu mythology he keeps a record of all deeds – good and bad and their balance decides whether we go to heaven or hell.
  • Sir Isaac Newton – In later life, he was master of Royal Mint for 30 years. He oversaw the Great Coinage of 1696 when counterfeit currency was rife. It is said he was an honest man when corruption in public life was widespread. He lost a fortune in South Sea Company Bubble. He is also credited, perhaps mistakenly, for moving England from bimetallic system to Gold Standard. Seeing England prosper other countries adopted Gold Standard. There is a fascinating BBC radio play about his time in Royal Mint.


I will try and improve this list as I meet other characters on my accounting journey.

Bonus

  • Jesus was born in Bethlehem when Mary and Joseph visited it for paying their taxes. Luke 2:1-8.

Register of Overseas Entity

Update March 2023

Following ICAEW advice. Currently we are not doing this work.

First published 25 August 2022

Any overseas entity owning land or property in England or Wales since 1st January 1999 needs to register and inform Companies House about their beneficial owners (BO).

Register active from 1st August 2022. Time limit is six months i.e. all overseas entities must get their verification done by 31st January 2023.

2.4 Entity will need to update this information annually.

Fine for non-compliance

£500 per day or prison sentence of up to 5 years and restrictions when trying to sell or lease their land.

Step by Step process

7.1 Overseas entity gives the notice to BO

7.2 BO must confirm or correct the notice and supply Identity proof (ID) and address proof (VA)

7.7 Get ID and VA verified then complete the Companies house form with £100 fee.

7.8 Once application accepted Overseas Entity ID will be provided. This ID needs to be provided to Land registry. Please note there is no need to provide OE ID to Land registry if no application of sale/purchase is being made. In this case OE ID should be kept safely for future use in sale/purchase etc. transactions.

Verification

13.12 Obligation to identify the beneficial owners is on the entity.

13.17 Relevant persons are not required to do full ‘know your customer’ checks e.g. as to the source of wealth and source of funds, as required under the MLRs.

What information must be verified?

13.30 Verification involves verifying information about overseas entities, beneficial owners and managing officers. Verification checks for individuals should involve looking at both evidence to match their identity as well as evidence of the condition met to be a beneficial owner (or managing officer).

Check ID and VA of Beneficial Owners.

13.40 Verify passport in person or via video link.

Collect 

  1. Certificate of incorporation
  2. Certificate of incumbency, if any
  3. Register of Members
  4. Register of Directors

13.66 Verification must happen before the information is submitted to Companies House, but not more than three months before.

13.76 Keep records for 5 years.

Source : Technical Guidance