Businesses need to remember to file their ERS (employment related securities) submissions on time as the number of penalties for late filings has risen by 15% since 2018.

The data obtained by a national firm from HMRC under a Freedom of Information request, show that despite the increase in the number of fines issued, the total amount collected by HMRC in late payment fees has reduced by 22% since 2018, from £3.1m to £2.4m.

It is important that all businesses submit ERS returns now in order to avoid penalties as failure to file these annual returns on time result in an automatic penalty of £100 per plan. The benefits received from a tax-advantaged plan may also be lost.

The deadline for submissions is midnight on 6 July 2021 to avoid a penalty of £100 for late submission. Penalties can also be issued for any errors in the submission.

Penalties rise to £300 by 6 October 2021, and a further £300 by 6 January 2022, with HMRC able to impose further penalties if these returns remain outstanding by 6 April 2022.

Directors or employees receiving shares, options, restricted stock units or LTIP share awards have employment related securities (ERS) and their employer is obliged to submit an annual ERS return before July 6. After that, penalties are automatic.

Many companies do not realise that even one-off share acquisitions by directors and employees are within the scope of a return. Also, once registered with HMRC, you still need to submit a nil return to ensure you do not get penalised.

In addition to penalties for failing to file these annual returns, a failure to register a tax-advantaged plan will affect the tax treatment of future participants.

Companies should also note that to submit an ERS return they must first register with HMRC’s Employment Related Securities Service, which can take up to 10 days.