Income Tax (Earnings and Pensions) Act 2003 section 81A

Notice of SIP to be given to HMRC

Section 81A sets out the notification requirements that a company must satisfy with HMRC in order for its Share Incentive Plan (SIP) to qualify as a tax-advantaged Schedule 2 SIP, including the content of the notice, the declaration required, the deadlines for notification, and the consequences of late notification.

• The company must notify HMRC of the SIP, providing all required information together with a declaration that the SIP meets the legislative requirements set out in Parts 2 to 9 of Schedule 2.
• Once valid notice is given, the SIP is treated as a Schedule 2 SIP from the relevant date — either the date the declaration is made or, if the declaration is made after shares have first been awarded, from that first award date.
• If notice is given after the initial notification deadline of 6 July in the tax year following the first award, Schedule 2 status applies only from the start of the relevant tax year, unless the scheme organiser demonstrates a reasonable excuse for the late notification.
• HMRC must decide within 45 days whether a reasonable excuse exists; if they fail to respond within that period, they are treated as having decided there was no reasonable excuse and must notify the scheme organiser accordingly.