Share Option Cases Late Filing Surcharge

Years 2000/2001 onwards

Section 27 Finance Act 2000 amended Section 128 TCA 1997 with effect from 6 April 2000. The amendment provides that persons exercising, assigning or releasing rights, including share options, are ‘chargeable persons’ and therefore within the Pay and File (Self Assessment) System. As a consequence, the late filing surcharge provided by Section 1084 TCA 1997 applies where the income tax return is not submitted by the relevant due date for the relevant tax year even where all the person’s other income is solely within PAYE. The tax years 2000/2001 onwards are not affected by the Crowley v Forde decision referred to below.

Years 1999/2000 and prior

In the case of Crowley v Forde (2004) - the High Court found that a person whose total income for the year 1999/2000 consisted only of -

1. Income to which PAYE applies; and
2. Gains arising from the exercise of share options chargeable under Schedule E by virtue of section 128 TCA 1997;

is not a ‘chargeable person’ for that year and therefore the late filing surcharge referred to in Section 1084 TCA 1997 does not apply for that year. Revenue did not appeal the High Court decision in the Forde case.

In cases where the facts are similar to the Forde case, the late filing surcharge incorrectly applied for the year 1999/2000 and prior years (but not any later years) will be repaid together with interest or offset (as appropriate). Practitioners with cases in this category may apply to the relevant Revenue office for the necessary refund or offset (as appropriate).