HMRC condemns Growth Securities Ownerships Plan
TAX SCHEMES that are based on contracts for difference have been labelled “ineffective” by HMRC as it looks to challenge any employer that’s using the initiative.
The Growth Securities Ownership Plan (GSOP) is a tax scheme which is based on contracts for difference, a system that employers use to provide rewards for their employees without having to pay any income tax or national insurance.
Accountancy firm Grant Thornton have been subject to criticism after it was revealed that the service had been taken up by around 30 of its clients.
The ownership plan allows employees to purchase a contact for difference, enabling them to receive a cash reward at a pre-determined date if they achieve certain targets, targets that are usually linked to company performance.
It is aimed at allowing privately owned companies or partnerships to sell or award the equivalent of “phantom” shares to selected employees, to give them an economic stake in the business.
Grant Thornton, have previously said to the Times newspaper: ‘The growth securities ownership plan was developed to help our clients link their employees’ contribution to the performance of their businesses and are not free of tax.
It added: In common with other incentive plans, if there is growth in value in the share or security that is issued to the holder of those shares/ securities, then that increase in value is correctly taxed as a capital gain. It’s a common approach . . . We have been open and transparent about this plan from the outset, including with HMRC.’
“We have put an enormous amount of due diligence into this”.
However they are being sued by a client in respect of the tax planning scheme for negligence and breach of duty.