Preparing for an employment-related securities due diligence exercise

Produced by Tolley in association with

Employment Tax

Guidance

Introduction

Due diligence (DD) exercises looking at employment-related securities (ERS) and share schemes take place in a number of circumstances but broadly all with the same aim ― to look at risk areas around ERS and share schemes where there could be liabilities, penalties or other risks for the company. Where possible, the DD report will quantify those risks.

It is worth noting that tax liabilities which do not rest with the company are not usually within the scope of a DD report eg income tax charges which fall solely on an employee or director would not be within scope, but income tax due via PAYE would be.

An ERS DD could be expected when any mergers and acquisitions (M&A) activity is due to take place. This includes, but is not limited to:

•
when marketing the company for sale
•
a bank or other lender considers making a loan to the company
•
a person or organisation considers investing in a business
•
when preparing to

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Helen Wood

Founder, HLN WD TX , Employment Tax

Helen Wood is the founder of HLN WD TX, a share schemes and employee incentives advisory business.She qualified as a CA with ICAS in 2009 and has worked as a specialist reward and incentives advisor for 17 years, spending 13 of those at KPMG followed by 3 ½ years as an Associate Director at RSM. Helen has worked with businesses ranging from start-ups to fully listed companies, spanning owner-managed businesses, private equity portfolio companies, and AIM listed businesses.She advises on a wide range of employee share schemes and employment related securities matters including the design and implementation of effective management and employee incentives; tax valuation of employment related securities, buy and sell side transaction support, HMRC compliance, tax due diligence and employee ownership trust transactions.

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