Tailor v Revenue & Customs [2013] UKFTT 199 (TC) (27 March 2013)

Tailor v Revenue & Customs [2013] UKFTT 199 (TC) (27 March 2013)

Although the offer to non-management shareholders was a 'general offer', it was not an offer to acquire the whole of the issued ordinary share capital or all shares of the same class, as required by paragraph 37 Schedule 3 ITEPA 2003. Therefore, the appellant did not acquire her shares 'under' the SAYE scheme for these purposes, and PAYE should have been deducted. As PAYE was not deducted, the appellant is entitled to a credit and cannot be assessed under self-assessment for the gain.

Citation
[2013] UKFTT 199
Parties
Appellant: Hema Tailor; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
27 March 2013
Procedural Posture
Tax Appeal (first Tier Tribunal, Tax Chamber) / Appeal Against Closure Notice Amending Self Assessment Tax Return
Outcome
Appeal allowed
Legal Topics
Income Tax, PAYE (pay as You Earn), SAYE Share Option Schemes, Self Assessment, Management Buy Outs, Approved Share Schemes
Tax Law Employment Law Income Tax PAYE (pay as You Earn) SAYE Share Option Schemes Self Assessment Management Buy Outs Approved Share Schemes

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Parties

Hema Tailor

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Tax Appeal (first Tier Tribunal, Tax Chamber) / Appeal Against Closure Notice Amending Self Assessment Tax Return

Legal Issues

  1. 1 Whether the gain from the exercise of SAYE share options should have been subject to PAYE or self-assessment
  2. 2 Whether the options were exercised pursuant to a 'general offer' for all share capital under paragraph 37(a) Schedule 3 ITEPA 2003

Ratio Decidendi

Although the offer to non-management shareholders was a 'general offer', it was not an offer to acquire the whole of the issued ordinary share capital or all shares of the same class, as required by paragraph 37 Schedule 3 ITEPA 2003. Therefore, the appellant did not acquire her shares 'under' the SAYE scheme for these purposes, and PAYE should have been deducted. As PAYE was not deducted, the appellant is entitled to a credit and cannot be assessed under self-assessment for the gain.

Court Disposition

Appeal allowed

Orders

  • Closure notice amending the appellant’s self-assessment tax return for 2007–08 is set aside to the extent of the SAYE share option gain; appellant not liable to income tax under self-assessment for the gain.