31 March 2021 is the mandatory due date for the filing of returns of information for employee share participation schemes in respect of 2020. The deadline is particularly important for companies whose employees and directors have participated in unapproved share options schemes, key employee engagement programme (KEEP) options, or certain Revenue-approved share participation schemes.
Failure to comply with this mandatory filing obligation can result in a monetary penalty. In the cases of Revenue-approved schemes (such as approved profit sharing schemes, employee share ownership trusts, and save as you earn schemes), Revenue approval of the scheme can be withdrawn, and for KEEP option schemes, the company would no longer be considered as a qualifying company. Revenue has indicated that the deadline to file the employer returns of information for the above schemes will not be extended beyond 31 March 2021, unlike for 2019 reporting where the deadline was extended beyond 31 March 2020, due to the COVID-19 pandemic.
The new electronic reporting (see below) means that employers will also be required to file returns of information for certain other share schemes for 2020 and subsequent years. This will assist Revenue in gathering significant detail on the schemes giving them much greater visibility of such schemes as operated by companies. This will also add to the administrative burden for companies in meeting their filing obligations.
The 2020 Form RSS1 requires the reporting of the grant, release, assignment and exercise of options awarded to directors and employees only. The Form RSS1 must be delivered in electronic format. No entry is required on Form RSS1 for awards which have been subject to PAYE through payroll (including restricted and forfeitable shares and the vesting of restricted stock units).
KEEP options are tax favoured options granted to employees and directors of certain SMEs introduced on 1 January 2018.
The 2020 Form KEEP1, like the RSS1, is in electronic format and requires the reporting of the grant, release, or assignment and exercise of KEEP options by relevant employees and directors. Compliance with meeting the due date for filing Form KEEP1 is extremely important as failure to comply with this mandatory filing obligation will result in the company not being regarded as a qualifying company for KEEP and the tax favoured treatment being lost for their employees.
Employers must return details of certain events and transactions in shares held by the APSS trust. As outlined in previous alerts, the information return Form ESS1 must now be delivered to Revenue in an electronic format and the APSS trust must be registered for income tax, with its own tax reference number. Additional time should be factored in by employers if they need to register the trust for income tax and ensure that their tax advisor (if filing the return on their behalf) is linked as their tax agent with Revenue, in order to ensure the Form ESS1 is filed in time.
The electronic Forms RSS1, KEEP1 and ESS1 are in a spreadsheet format which must be uploaded via the Revenue online system (“ROS”). Only registered ROS users may access and upload returns.
A separate 31 March 2021 mandatory filing requirement also applies to the following Revenue-approved share participation schemes:
These filings continue to be in paper form.
Finance Act 2020 provides for returns of information on share plans where there was until now no prescribed format for reporting and that this reporting to be in electronic format. While we have not yet had sight of the “Form” we expect it will cover the following schemes:
The electronic “Form” is currently in design phase and is not yet available for usage. Revenue has confirmed that it is their intention that this filing requirement will apply for 2020 and they may extend the statutory deadline of 31 March 2021, if the electronic form has not been released in advance of this deadline.