David Pett
David Pett is a barrister at Temple Tax Chambers advising on all direct taxes, but with a special interest in employment-related securities, share plans, employee-owned companies and employees' trusts. He is author and co-editor of 'Employee Shares Schemes' (2-Vol loose-leaf, pub. Thomson Reuters) and other works on the subject. Trained at Clifford-Turner, and for many years partner and Head of Tax at Pinsent Masons, David founded the specialist law firm, Pett Franklin LLP, in 2009 before transferring to the Bar in 2017.
Practice Area
Panel
- Consulting Editorial Board
2 Contributions by David Pett
PRACTICE NOTES
Board discretion in UK EMI share options: HMRC guidance on vesting variations, exercise timing and 'surrender and re-grant' risks
Issues on the use of discretion in EMI share options
This topic has drawn attention in recent years, seemingly after reports that at least one law firm received a ‘rogue response’ from a junior at HMRC’s Employee Share Schemes Unit (ESSU). The query asked HMRC to confirm that tax relief could apply where shares were acquired on an early exercise of Enterprise Management Incentives (EMI) options, using a board discretion expressly included in the option terms, triggered by a corporate event that did not otherwise give optionholders a right to exercise. HMRC apparently indicated that, in those circumstances, the early share acquisition would attract income tax relief as an acquisition under an EMI option. By contrast, there were accounts of HMRC stating that deploying discretion to amend performance-based vesting conditions destroyed the options’ EMI-qualifying status. Any such determinations (if made) were misjudged. Nevertheless, this ‘set a hare running’, with some practitioners wrongly asserting that exercise pursuant to any discretion on the part of the board...
Share Incentives
PRECEDENTS
Employee Ownership Trust (EOT) Deed Precedent: Controlling Interest Acquisition, All-Employee Benefit Compliance, Trustee Governance and Voting (TCGA 1992; IHTA 1984) (England and Wales)
This Deed is made on [ insert date on which this deed is executed by all parties ]
Parties
[ Insert name of Company ], with its registered office at [ insert address of registered office ] and registered number [ insert registered number of Company ] (the Company); and
[ Insert name of Trustee ], whose registered office is at [ insert address of registered office ] [ and registered number [ insert registered number of Trustee ] ] (the Original Trustee).
RECITALS
The Company intends to create a trust for the benefit of the employees of the Company, to be called the [ insert name ] Employee–Ownership Trust, and designed to meet the requirements of section 236J of the Taxation of Chargeable Gains Act 1992.
The Company has transferred to the Original Trustee the sum of £[ insert initial settlement amount ] as the initial Trust Fund...
Share Incentives
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