In J Charman v HMRC [2019] UKUT0253, the Upper Tribunal (UT) considered whether the grant of a share option amounted to a ‘right to acquire securities’. It also considered whether shares issued on a share for share exchange were acquired as an officer or employee of the original shares.

The FTT had determined that the taxpayer was UK Resident until 21 November 2003 and that the terms of the share options awards in three tranches made them taxable on the date of exercise and not grant. As the taxpayer had been non-resident at the time of exercise of the third option, this escaped UK tax.

HMRC appealed the FTT’s decision on the basis that the taxpayer acquired options when they were granted and so should be subject to tax in respect of all three options.

The taxpayer appealed against the FTT decision that the restricted shares had been acquired ‘as a director or employee’, as opposed to his capacity as a shareholder.

The UT determined:

The UT found:

Links

Employment Related Securities
This guide explains the tax consequences when a company gives shares to an employee or director and will assist you in designing share schemes.

ABC or alphabet shares: directors & employees
Giving shares to directors or employees

Statutory residence test toolkit
This is an interactive tool to determine 'At a glance' whether you are UK resident or not in a tax year.

External link

UT J Charman v HMRC [2020] UKUT 0253 (TCC)

FTT decision
FTT J Charman v HMRC [2018] TC06899