Income Tax (Earnings and Pensions) Act 2003 Schedule 5 paragraph 56

Determination of market value of shares

Section 56 sets out how the market value of shares is to be determined for the purposes of Enterprise Management Incentives (EMI) share options, including the role of HMRC and the right to refer disputes to the tribunal.

• The default position is that an officer of HMRC determines the market value of shares for EMI purposes, unless the employer company and HMRC reach an agreement or the matter is referred to a tribunal.
• HMRC and the employer company may agree to base the market value on a specific date, multiple dates, or an average of values across several dates.
• Before HMRC formally issues its determination to the employer company, the company has the right to apply to the tribunal to have the market value question decided independently.
• Any application to the tribunal is governed by the relevant provisions of Part 5 of the Taxes Management Act 1970, including in particular section 48(2)(b) of that Act.