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A Question of Value

 
Karen Cooper partner and Natalie Smith associate Osborne Clarke consider the importance of share valuation when granting Enterprise Management Incentive options and review HMRC's valuation practice
 
Enterprise Management Incentive (EMI) options are a popular and tax-efficient method of granting options to employees in smaller and medium-sized companies. This is likely to remain the case even after the introduction of a flat rate of capital gains tax and the abolition of taper relief. Determining the value of the shares over which options are granted is an integral part of the establishment of a successful EMI arrangement. However recent experience has shown that the Shares and Assets Valuation division of HMRC may be taking a tougher stance.
Why is a share valuation required?

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