Form 42?

[Andy M]

Over the past couple of months I've been getting a constant barrage of e-mails on this subject, the last being as follows:

"Over the last few weeks, we have been e-mailing all the companies who were formed through Companies Made Simple during the period 6th April 2004 to 5th April 2005.

We fully appreciate that you're probably fed up with receiving these e-mails, but we need to make sure that you fulfil your statutory obligation to complete Form 42.

Although there is some confusion as how to best ensure that every company that was formed during the tax year completes the form, it is a requirement of the Inland Revenue even if you have never traded.

The form is due by 6th July and unless you have been advised by a suitably qualified accountant that you don't need to submit this form, (and we suggest you get that advice in writing), you will be liable to a fine of £300 and £60 per day.

To be able to ensure we can collate all the information we receive and get it to the Inland Revenue by the deadline, we will not accept any more submissions after midnight on Tuesday 5th July. In addition, as our workload has increased from all the people who have left their submission to the last minute, the fee has increased to £20 plus VAT (many accountants are charging their clients on a time basis).

Companies Made Simple is offering a simple and easy solution and you can find it on our website by clicking here.

Alternatively, if you are happy that this doesn't affect you, and want us to stop e-mailing you, simply reply to that effect and we will take you off our list."


I've asked my accountant about this, but he's yet to get back to me.

Is it a load of tosh, or should I start filling in the forms? ;)

[james p]

This looks to be one of the forms that is either incredibly simple or complicated and where you stand depends on your company.

If you have a standard company formation with no complicated share structure the form should be straightforward. I would suggest you download the form [www.hmrc.gov.uk/shareschemes/42-2005.pdf]and read pages 2 and 3. You may only need to complete section 5 of page 16.

If uncertain send me a mail and I will explain further.

James

>> Edited by james p on Friday 1st July 17:07

[Eric Mc]

The Form 42 was invented to ensure that the Inland Revenue were fully aware of any "Share Schemes" set up for the benfit of company directors or their employees. Unfortunately, when drafting the legislation, the government decided that the issue or transfer of ALL shares to or between directors had to be included on the Form 42. Thius means that the simple issuing of shares to the directors/shareholders of a newly set up small compnay or the transfer of shares in such companies or the issuing of new shares in such companies are "Reportable Events" and therefore must be returned on the Form 42.
The Form 42 must be submitted to the Inland Revenue by the 6th July following the end of the tax year in which the "event" took place. There are fines and penalties for late submissions of such forms.

The really stupid thing about this requirement is that there already is an existing obligation to notify the Inland Revenue about share transfers under Stamp Duty rules. As usual, the Government have introduced draconian rules intended to catch the "bad boys" and somehow have succeeded in creating an over bureaucratic mess. I would guess that the bulk of fines and penalties collected will be down to oversights by small limited company traders and not the intended targets of complicated share schemes for the benefit of the "fat cats".