ETASSUM58020 - Enterprise Management Incentives (EMI): Supplementary and Definitions: Determination of market value

Paragraph 56, Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)

The market value of shares can be agreed between the employer and HMRC Shares and Assets Valuation. If no such agreement is made, the market value can be determined by an officer of HMRC. In making a determination an officer of HMRC and the employer company may agree that the value will be determined by reference to a date or dates or to the average of values on a number of dates stated in the agreement.

At any time before a notice of determination has been given to the employer company, the company may give notice to HMRC requiring that the market value of the shares is to be referred to the Tribunal who must determine it in the same way as an appeal.

A determination of market value will only be made after an enquiry has been opened into an option. If the time limit for opening an enquiry into an option has passed and no enquiry has been opened, the market value notified to HMRC for the grant of the option is taken as being correct (unless HMRC discover that false or misleading information, including an incorrect valuation in itself, was provided – see ETASSUM56110). The power to determine market value cannot then be used in order to give HMRC a longer period to enquire into the option.