Temple Tax Chambers
5 Experts
3 Contributions by Temple Tax Chambers Experts
PRACTICE NOTES
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
Share Incentives
PRACTICE NOTES
Introduction
Valuation is needed at multiple stages in an IP asset’s life for diverse aims, including business or IP disposals, joint ventures, litigation outcomes, insolvency, financial reporting and tax matters (such as transfers between connected parties and transfer pricing). In every instance, a market value or arm’s length figure—or an arm’s length royalty for a licence—must be derived for a hypothetical transaction, ignoring owner‑specific synergies.
There is no universal method; the chosen approach should reflect the putative deal and the level of robustness required, which depends on the asset’s significance, the nature of the transaction and the reason for valuing (eg loan security or a critical patent transfer).
Comparison approach: references prices, bids or offers for comparable IP, often via specialist databases; typically a corroborative check due to scarce, non‑identical data and undisclosed
IP
PRECEDENTS
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
Share Incentives
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