Income Tax (Earnings and Pensions) Act 2003 section 56

Repayment of partnership share money on plan ceasing to be a Schedule 2 SIP or termination

Section 56 requires that partnership share money held on behalf of employees must be repaid to them when a Share Incentive Plan loses its Schedule 2 SIP status or is terminated.

• If a plan loses its Schedule 2 SIP status (whether by HMRC decision or by the company's own notice of withdrawal), any partnership share money held for employees must be paid back to them.
• The repayment must be made as soon as practicable after the "relevant day," which is either the last day for lodging an appeal or, if an appeal is lodged, the day it is determined or withdrawn.
• If a plan termination notice is issued, any partnership share money held for employees must also be repaid to them.
• Where a termination notice has been issued, the repayment must be made as soon as practicable after the trustees are notified of the termination.