What should be the underlying policy objective and how could that be achieved?

It is generally agreed by politicians of all parties that it is a good thing “to enable employees to share in the growth in value of the business to which they contribute by their labour”.

We have, on the statute book, provision for various long-standing tax-advantaged arrangements for employees of an independent company to be able both to acquire, and then sell, shares in their employer company on favourable terms. Specifically, and presently, income tax and CGT reliefs are afforded (within limits) to ordinary shares in the employer company acquired pursuant to a Share Incentive Plan, and to the grant and exercise of options to acquire employer-company shares granted to all qualifying and eligible employees as savings-linked share options, and on a selective basis as Company Share Options (“CSOPs”) or, if the company itself qualifies, as enterprise management incentives (“EMI share options”). In addition, employers may be eligible for relief from corporation tax for amounts corresponding to employee share option gains and certain other amounts on which employees are charged to income tax on the acquisition of employment-related shares.

Since 2014, relief (indeed, complete exemption) from CGT has been available (if claimed) for sales by individuals and their personal trusts of shares in a trading company (or holding company of a trading group) to a special form of employees’ trust (an “employee ownership trust” or “EOT”) which thereby acquires a 51%+ controlling interest in the company within a single tax year. Provided all statutory conditions are met and there is no “disqualifying event”[1] before the end of the next tax year, the vendors escape all liability for CGT on their disposal of shares to the EOT.

This legislation affords a powerful incentive to proprietors of private companies to sell their shares to such an EOT. Indeed, so far, there have been over 1,500 companies sold to EOTs and the trend has accelerated for fear of changes or restrictions being introduced (although this government has said it will only amend, not withdraw, the relief). Typically, the EOT is funded by the company being sold making cash contributions out of distributable profits, the vendors having to remain as unsecured creditors of the EOT until future profits have been generated sufficient to put the trustees in funds to enable them to pay any outstanding consideration.

Whilst an EOT-owned company can pay annual tax (but not NICs)-free bonuses of up to £3,600 to qualifying employees, employee beneficiaries of the EOT cannot – unless the company or its business is sold on – individually benefit from growth in value. Even if the trustees subsequently sell-on the company, the amount received by the trustees – after a clawback charge to CGT on their part and the payment of outstanding consideration due to the original vendors – is unlikely to leave much ‘in the pot’ for the employee beneficiaries, and what is paid to them is taxed as employment income, not capital gain (see the example below).

The legislation is flawed, and experience suggests that in many cases the arrangements are structured with the primary objective of allowing a tax-free sale and extraction of profits, rather than with any real intention of enabling the employees to benefit from future growth in value or from the company being owned and controlled by trustees on their behalf. Nevertheless, the EOT-ownership model, which in many respects emulates the example set by The John Lewis Partnership, is held up by some as the ideal way to maintain independent private-company ownership on a sustainable basis. Whilst it may afford an alternative to a trade sale or a disposal to private equity, it should be remembered that there is only one John Lewis…..and look at where that is now!

Crucially, The John Lewis Partnership is not – and an EOT-owned company is not – an employee-owned company. It is a company owned and controlled by a trust, and the question to be asked is: who are the trustees, and who appoints and removes them?

Further, individual employees of John Lewis/Waitrose do not own shares in the group. “Partners” so-called might (but have not recently) receive annual bonuses out of profits – taxed as employment income. What they do not enjoy is any ability to benefit financially from the growth in value to which they contribute.

In my experience – having advised upon and devised the ownership structures of multiple employee-owned companies, employees’ trusts, and employee share schemes, beginning with the privatised bus companies in the early 1980s – the most successful private company ownership structures (in terms of resulting in substantial growth in value and employee satisfaction and reward) are those which:

• have enabled individual employees to benefit financially from an appropriate share in the growth in value to which they have contributed by their labour over the period of their employment, and to do so in a manner which is taxed in the same way as if such gain was realised by a non-employee shareholding investor; and
• have a corporate governance structure which, whilst allowing the views of employees to be identified and taken into account, includes sufficient checks and balances to ensure that the directors are free to manage the business in the best interests of all shareholders.

The case for change

There is a strong case for a change in the UK’s tax (and company law) regime to allow and encourage employees, workers and others who contribute their personal services towards the business of a trading company, to be able both:

• to participate in dividends out of profits generated annually on shares held on their behalf collectively in a trust; and
• to benefit from growth in value of shares which they may acquire on and after appointment, and dispose of on or after leaving (or after a reasonable holding period).

We need a regime which encourages sustainable independent ownership of successful businesses, not one which positively incentivises individual shareholders to sell out and run away. We need a UK version of the German “Mittelstand”. Very broadly, our existing tax regime encourages the sale of successful private trading companies. It does not, as in many European countries, allow and encourage the maintenance of independence through succession of family and employee ownership.

The idea of “companies with employee ownership” (as opposed to “employee-owned companies”) as being “a good thing” was recognised by the former coalition government and model documentation to support its implementation was published on the Dept for Business website in 2013 and still remains accessible. By contrast, the EOT regime was independently devised by HM Treasury (without consultation with the Dept for Business as it then was).

The policy behind the EOT legislation should be to balance the interests of company proprietors – so as to offer them a financially viable alternative to selling the company to a trade buyer or to private-equity or other investors – with those of employees who should be enabled to benefit personally from the growth in value to which they contribute and to do so in a manner which is taxed no less favourably than if they were private investors and not employees.

As things have stood since 2014, the balance is firmly in favour of the vendor proprietors who are afforded total exemption from tax, and giving little or no opportunity for employees (supposedly those persons for whose benefit the EOT regime was enacted – the clue being in the title!) to benefit, other than by limited enhancement to their taxable employment income. I give you an example to illustrate the current position:

Rather than sell a company worth, say, £10m to a trade buyer keen to acquire it, and accept a CGT bill (assuming entitlement to BADR) of 10% on the first £1m, and 20% thereafter, Mr X can instead (i) sell, say, 75% to an EOT for say £7m (discounted to reflect the size of the holding) of which, say £2m is paid upfront, and (ii) retain 25% with a view to waiting until after the end of the next tax year. Then, the trustees (who may well be effectively controlled by the original vendor(s)) agree[2] to join in a sale to the trade buyer for, say, £10m in aggregate. If the trustees’ 75% is sold for, say, £7.5m, the trust fund (after (a) tax of, say, 20% on their gain, over the, say, nil inherited base cost of Mr X, and (b) payment of the balance remaining of the consideration due to Mr. X (£4m)) is left with (£9m – £6.5m =) £2.5m to be distributed amongst the qualifying employee beneficiaries subject to PAYE income tax and NICs. Mr X will have received £7m tax-free, and £2.5m subject to CGT (of which £1m is at the reduced BADR rate of 10%).

I set out below a summary of what might be done:

•  to improve the EOT regime in order to enable and allow individual employees to benefit from distributions of profits and capital growth, and

• to enable all employees, workers, consultants and individual contractors of an independent company (or member of an independent trading group of companies) to benefit likewise and in a manner which is treated for tax purposes no less favourably than that afforded to other investors.

Companies controlled by an EOT

I suggest the following changes:

1. Restrict relief from CGT for disposals of shares to an EOT to no more than the (discounted) market value of the respective holdings of shares sold by claimants.
2. Remove the provision for tax-free annual bonuses payable by EOT-owned companies and, instead, provide an exemption from income tax on the part of the trustees of an EOT for dividend payments received from the EOT-owned company if:
3. the dividends are paid out to eligible and qualifying employees on an “all-employee and similar terms” basis; or
4. the dividends are retained by the trustee(s) and applied (within, say, 3 years) in the purchase of shares in the EOT-owned company from employees who leave or who, with the agreement of the trustee(s) wish to sell having held such shares for a minimum period (of 3 years?) for a consideration which does not exceed the pro rata value of such shares determined by reference to the “market value” of the company as a whole as agreed with HMRC SAV (or certified by a recognised share valuer).

This need not be limited, as are the annual tax-free bonuses, as – unlike the payment of such bonuses – the ability of the EOT-owned company to pay dividends is dependent upon the generation of distributable profits.

3.     Provide that such payments, made out of dividend income of the trust, to employees of an EOT-owned company (and ex-employees who have left for whatever reason within the past 12 months) are taxed as dividend income, not as earnings.

4.     Amend the existing tax rules so as to provide that disposals of ordinary shares in the EOT-owned company beneficially owned by employees (as “employment-related securities”) to the EOT for a consideration which does not exceed the pro rata market value described at 2(b) above is taxed as capital gain, not as employment income (see Chapter 3D, Part 7, ITEPA 2003).

5.     Allow ordinary shares in the EOT company to be appropriated to employees and/or sold to employees by way of awards under a tax-advantaged Share Incentive Plan without that being a disqualifying event (see footnote above), and for so long as such shares are beneficially owned by individual employees and held in the SIP, allow those shares to be counted towards the percentage ownership of the share capital of the company by the EOT (so that the aggregate of such SIP shares, together with those beneficially owned by the EOT must not fall below 50% + 1 if a disqualifying event is to be avoided).

The combination of such changes, together with changes to SIPs, which have been separately suggested in a response to the Call for Evidence by HMRC on SIPs and SAYE share options, would enable an EOT-owned company to allow its employees to benefit directly from sharing in the growth in value of the EOT-owned company over the period of their employment in a tax-advantaged manner (within the confines of a SIP).

The suggestion at 4 above would afford a commercial freedom to allow an EOT-owned company to enable its employees to benefit from such growth in value, subject to CGT, by way of other (existing) mechanisms for the acquisition and disposal of employee shares (such as the grant and exercise of EMI and CSOP, as well as “unapproved”, share options to subscribe for new shares or the operation of an internal market in employees’ shares).

Other more detailed and technical changes recommended to HM Treasury are set out in my response to a Call for Evidence earlier in 2023. The detailed response is to be found at : https://davidpett.tax/2023/08/20/employee-ownership-trusts/

Changes proposed to encourage financial participation by employees in other companies

The ideas put forward in items 2 and 3 above may also be applied to all other independent companies or groups of companies, not just those which are majority owned or controlled by employees or trustees. It is often asserted that it is wrong in principle to encourage employees, by participating in employee share schemes, to “put all their financial eggs in one basket” by becoming dependent upon the fortunes of their employer to secure their employment income, their pension, and their savings. By allowing, without tax disadvantages, an employer to fund an employees’ trust to acquire a tranche of ordinary dividend-entitled and non-restricted, or publicly-traded shares, to be held on a collective basis for the benefit of employees, past, present and future so as to allow them to participate as suggested above and without individual risk, would be attractive to many, including private-equity backed, companies. At present, for example, a loan by a closely-held company to an employees’ trust for such a purpose attracts a penal tax charge under the “loans to participators” rules.

Finally, many larger companies, both publicly traded and privately-owned, do have employees’ trusts which they use to warehouse shares pending their transfer to participants in share-based incentive arrangements (such as L-TIPs, Restricted Share Plans. JSOPs, Growth Share Plans, etc.). It has been repeatedly pointed out to HMRC and Treasury Ministers that the reason why companies typically appoint offshore (typically in the Channel Islands or Switzerland) independent trustee services companies, not UK trustees, as corporate trustee of their employees’ share trust, is that existing tax rules treat them more favorably than UK-resident trustees. Why the government has not at least “levelled the playing field” and allowed companies to repatriate their employees’ trusts without penalty or risk of CGT charges on gains in the trust, is a mystery.

The government is expected to make changes to the EOT regime in the 2024 Finance Bill. It remains to be seen if the wider changes sought will attract support from a new government in 2024.

…………………………………………………….

David Pett

Temple Tax Chambers

30^th November 2023

---

[1] Such as a reduction below 51% of the EOT’s interest or a sale of the company or its business or a distribution of benefits otherwise than on an all-employee/similar terms basis.

[2] If, but only if, they are of the reasonable judgement that to do so is in the best financial interests of the employee beneficiaries.

My Responses to Open Consultation on Taxation of Employee Ownership Trusts and Employee Benefit Trusts – Part 7, Questions 9-12 – EBTs

Question 9 – making explicit that restrictions on connected persons benefiting be for the lifetime of the trust.

9.1 First, I have seen within instructions received a number of examples of tax planning for succession of ownership of a close company, based upon the opinions expressed by certain KCs, to the effect that death breaks any prior connectivity between a transferor and (typically) a child of the deceased transferor who is or has been an employee or director. If, therefore, the settlement terms grant the trustee power to exercise dispositive powers in favour of a member of the class of beneficiaries who, being an existing or former employee or officer of the body concerned, is not then so connected, such powers may (and are intended to be) exercised in their favour to the exclusion of other members of the class. The question of whether this interpretation is correct has not yet been the subject of judicial determination (and such an interpretation does appear to have been accepted by the GAAR panel – see Example D29), although, as mentioned in the Consultation document, doubt has been cast by members of the Court of Appeal.

9.2 Secondly, neither I, nor (so far as I have gleaned from conversations with a number of solicitor practitioners) other specialist advisers on employee share plans have any objection in principle to the idea of pre-empting any such judicial determination by amending ss13, 28 and 75, possibly with retrospective effect, so as to put beyond doubt that, to qualify for exemptions from inheritance tax, the trust must positively exclude from benefit (otherwise than in the form of income chargeable to income tax – see below) at any time – and specifically both when the disposition or transfer is made into the settlement (“Time A”) and when the trustees exercise their dispositive power (“Time B”) –  any person who:

• is at Time B a participator in (a) the close company whose shares are or have at any time been held in the settlement, or (b) the close company which made the disposition to the settlement, or (c) any other company connected or associated with (a) or (b);

• is at Time Aor was, at any time in the period of 10 years before Time A, a participator in (a) the close company whose shares are or have at any time been held in the settlement, or (b) the close company which is making the disposition to the settlement, or (c) any other company connected or associated with (a) or (b);

• was a participator in any other close company which has made a disposition into the settlement, or was a participator in any such company at any time within 10 years before such a disposition is or was made;

• was, at or within 10 years before Time A, connected with any such person, or is at Time B, or has at any time since Time A been, connected with any such person.

Question 10 – should shares need to have been held for 2 years before transfer into an EBT to qualify for relief from IhT on transfer in?

10.1 It is difficult to support this proposal without understanding the policy reason behind it and the mischief it seeks to address – neither of which is explained in the Consultation document. I have seen examples of start-up companies whose founding shareholders have been anxious to “ring-fence” a proportion of the issued share capital for the benefit of employees and have formed an EBT for perfectly legitimate and understandable (non-tax) reasons very soon after the company was formed. The fact that a founding shareholder transfers into trust a proportion of the shares for which he or she has subscribed, rather than put the trustee in funds to subscribe for shares, should not of itself disqualify the trust and its settlor(s) from the benefit of IhT reliefs.

10.2 Again, if there is a company reorganization or reconstruction as a consequence of which an investor begins to hold shares in a new holding company, why should that person then have to wait 2 years before a transfer of shares into an EBT qualifies for relief?

10.3 I have not come across any example of tax avoidance, or tax planning, where the mischief (actual or perceived by HMRC) is, or might arise by reason only of, a transfer of shares into an EBT being made within 2 years of acquisition.

Question 11 – should those individuals who (i) may receive benefits in the form of income, and (ii) are connected to a participant, be restricted to no more than 25% of all those able to receive income benefits?

11.1 The first point which requires clarification is the meaning of s65(5)(b) IhTA 1984. Specifically, what is the policy intent behind, or what is meant by, “….income of any person for any of the purposes of income tax….”?

11.2 In practice, it is understood that HMRC interprets this as meaning “is actually charged to income tax in the hands of the recipient”. It is far from clear that this is correct.

11.3 At one end of the scale, it could mean income in the trust law sense of regular receipts from a subsisting source. Alternatively, it could mean a receipt which would fall to be charged to income tax but for the availability of a relief or exemption (such as, for example, the availability of double taxation relief under the Disguised Remuneration rules). Is the acquisition of shares pursuant to an employee share option, giving rise to a charge to income tax under Chapter 5, Part 7 ITEPA, to be regarded as “income for one of the purposes of income tax”? It is a capital gain specifically charged to income tax.

11.4 Surely, the policy debate should be whether, to qualify for IhT exemptions, participants and connected persons required to be excluded from capital benefit should nevertheless be permitted to take benefits in any other form, unless, perhaps, the full amount of benefit actually received or realised falls to be charged to income tax (and NICs?)?

11.5 The proposal as framed in terms of there being a maximum limit, of 25%, on the percentage of employees (and officers?) who may receive benefits which are charged to income tax (if that is the effect of what is proposed) appears arbitrary and to have unintended consequences. Is this restriction intended to apply only to close companies whose shares are held in the EBT, or which have made a disposition to the EBT?

11.6 At its simplest, a trust for the benefit of a large family-owned (close?) company (or group – see below) which has a large number of family members employed may find such a restriction to be unfair when compared with the EBT of another company employing an equal number of family members, but which has a larger workforce overall.

11.7 In applying the proposed restriction, how is the fractional limit to be defined? Who, at any given time, is within the denominating number of “employees who are able to receive income payments”? Will it extend to include all members of the class of beneficiaries who are, at that time, employees or officers of the company, or group, concerned? Or, is it intended to be confined to those employees who are excluded from participating by receiving benefit in a capital form, but are nevertheless still able to receive benefit in the form of “income for the purposes of income tax”?

11.8 Presumably, the numerator is intended to include all those persons mentioned in ss13(2) and 28(4), and not merely those who, not being participators themselves, are connected to a participator (as the question suggest)?

11.9 It is worth remembering that the “close companies” case of the Disguised Remuneration legislation in Part 7A, ITEPA 2003 (s554AA et. seq.) goes a long way to protecting the Treasury by ensuring that benefit received from an EBT, even if not referable to an office or employment, is brought within the charge to income tax. This does not, however, apply if there has been no “relevant transaction entered into by a close company” (per s554AA(1)(c)) because, for example, the majority shareholding in the EBT was gifted by an individual settlor who has claimed relief under s28 IhTA.

Question 12 – how else could the tax treatment of EBTs be enhanced?

It is assumed that this question relates to the inheritance tax treatment of EBTs, and does not extend to the provisions in Chapter 11 of Part 7, ITEPA 2003 (which would benefit from a review and simplification).

Section 86 IhTA

12.1 This has always been difficult to interpret and apply as it is drafted in a manner which is obviously intended to extend the scope, of what is a “gateway” provision, to both incorporated and unincorporated bodies and refers not only to employees and officers of a particular body carrying on a trade, profession or undertaking, but also to those engaged in a particular trade or profession (and who may therefore be engaged in a variety of unrelated businesses or by different and otherwise unconnected or unassociated bodies). This has allowed the establishment of settlements which (so certain KCs have asserted) are compliant with s86 but have been intended and used for what were clearly tax avoidance purposes.

12.2 I have, for example, seen a trust drafted by a KC which was intended to qualify as a s86 trust notwithstanding that the class of beneficiaries included only persons related to or dependent upon officers of the company, and excluded those who are themselves employees or officers. This suggests that the requirement of s86(3) needs to be expressed to apply where the class of beneficiaries is defined by reference to the persons mentioned in ss(1)(b), as well as those mentioned in ss(1)(a).

12.3 The opportunities for such tax avoidance would be restricted, or possibly removed altogether, if s86 were re-cast and re-enacted in a manner which reflects the modern purpose and legitimate usage of EBTs.

Exclusion of trusts for persons engaged in a type of trade?

12.4 First, I suggest that consideration be given to whether the benefit of this gateway provision should be restricted to certain types of body, excluding trusts for the benefit of persons engaged more widely with any employer, or type of employer, albeit that they are all engaged in a particular type of trade or profession. Whilst there may be some legitimate legacy settlements which were established for the benefit of persons engaged in a specific type of craft or trade or profession, I can only recall having come across one such trust in c 40 years of practice in this field.

Exclusion of officers?

12.5 Secondly, should s86 extend to trusts for the benefit of a class which includes officers who are not employees? There are sound company law and other reasons why it is typical for an EBT to have a class of beneficiaries restricted to current, former and future bona fide employees, excluding non-executive directors and other officers who are not, and have not ever been, such employees. What is the policy reason for allowing the inclusion of non-employee officers?

Split s86 into two provisions: one for trusts for employees of a body corporate, and one for employees of another specified body?

12.6 Typically, EBTs are established for the benefit of a class of employees of a single company or of members of a group of companies (as closely defined in the trust deed) – although it is far from clear that s86(1)(a) is properly to be interpreted as allowing the class of beneficiaries to be defined by reference to employment within a group of companies (although I have never known HMRC to take this point against a trust claiming s86 status). It might be helpful if, to reflect this commercial practice, s86 were to be split into two distinct provisions, one of which refers to a trust for the benefit of employees of one or more bodies corporate, with a requirement that, if the class extends to employees of two or more companies, the beneficiaries must – if the trust is to preserve its s86 qualifying status – be restricted to employees and former employees of the body corporate identified (“Company A”) and any other UK resident company which, at the time of exercise by the trustees of any dispositive power, is a subsidiary (and under the control of?) of Company A.

12.7 It might also be a requirement that the companies concerned must all be trading companies or members of a trading group.

12.8 I have come across a number of EBTs established for the benefit of employees and officers of a family-owned property investment company, the intention being to benefit only family members, without regard to the wider class of beneficiaries (if any) – as was the case in Bhaur v Equity First Trustees.

12.9 If the trust is for the benefit of employees of a close company which is the holding company of a trading group of companies, the exemptions could be available only if the class of beneficiaries extends to employees (etc.) of all UK resident members of that group, thereby restricting the use of an EBT to benefit only those (the family members?) employed in a single group company.

12.10 However, there would need to be a proviso to this in that a trust should not cease to be a s86 trust by reason only that Company A ceases to exist because, for example, following a takeover or corporate reorganization, it has become an intermediate holding company which serves no commercial or financial purpose and is therefore wound-up, or the company ceases to be a trading company or holding company of a trading group.

12.11 It would also be helpful if a trust were not to lose its s86 status if the class of beneficiaries were to be extended to include persons who become employees of a holding company of Company A (“Company H”) after Company A becomes a subsidiary of Company H in consequence of an internal corporate reorganisation not involving a change of control of Company A, as opposed to a takeover or other change of control of Company A. (Clearly, those transferred up to Company H from Company A and its subsidiaries will count as “former employees” of Company A or a member of the group of which it was the holding company, but the idea is to allow the inclusion in the class of beneficiaries of new employees of Company H without the trust ceasing to be a s86 trust.)

12.12 A separate section, 86A, could apply the gateway requirements to trusts for employees of other specified bodies such as unincorporated businesses and partnerships (including LPs) and LLPs.

The “all or most” requirement

12.13 The requirement, in each of ss13, 28, 75 and 86, that the class of beneficiaries must include “all or most” of the employees and officers of the company concerned (and, in the case of s13, its subsidiaries) is vague and a judgement, as to whether it is met, subjective. The fact that it was thought necessary to add ss13A and 28A to take account of EOTs shows that difficulties arise if, for example, a trust excludes officers who are not employees and, in the case of a close company, participators and connected persons are necessarily excluded to meet the separate requirement of ss 13(2) and 28(4). Uncertainty can also arise if a number of directors or employees exclude themselves from participating as members of the class of beneficiaries.

12.14 It would provide greater certainty if the requirement were to be expressed as a need for the class of beneficiaries to extend to include all persons who are for the time being employees and former employees, other than (i) those excluded to ensure compliance with those sub-sections, (ii) any person beneficially entitled (directly or indirectly) to, or to acquire, a specified percentage [5%?] of the issued share capital – as opposed to any class of shares – and (iii) any person who has asked to be excluded (for whatever reason).

The 5% rule

12.15 The exception, in ss 13(3) and 28(5), to the exclusion from benefit of participators in a close company, of persons beneficially entitled to, or to rights to acquire, more than 5% of any class of shares is a trap for the unwary. If, for example, options to subscribe for shares of a specially-restricted class of “employees’ shares” are granted by a close company to a large number of employees (each option being over less than 5% of that class), but one such option is exercised early, that optionholder will become an excluded participator as the shares acquired, even if a small holding, will represent more than 5% of that class.

12.16 Would the mischief identified be addressed by expressing the exception in terms of being 5% of the issued share capital of the company?

An anti-avoidance rule?

12.17 The mis-use of EBT in family-owned or other close companies might be addressed by providing that all exemptions from inheritance tax (as an EBT) are forfeited if, in the case of a close company, the trustees exercise their dispositive powers (whether to apply capital or income) in favour of persons who, at that time, together (and together with those previously benefitted) represent fewer than, say, [10]% of those who at that time are employees of any company whose employees are within the class of beneficiaries; or, in the case of a company which has ceased to be a trading company or holding company of a trading group, less than that percentage of all those who were employees at the time of such cessation. For this to work, small amounts of benefit would have to be left out of account, the idea being to deny the benefit of inheritance tax exemptions if the trust fund is applied for the benefit of only a small number of those persons making up the current workforce.

Income tax: relief for distributions of dividend income

12.18 As described in my responses to the earlier questions re EOTs, there is a case for encouraging the re-distribution of wealth amongst employees by providing, in relation to a genuine “s86/s13 or 28” trust:

• an exemption from income tax in the hands of the trustees for dividends paid on shares beneficially held by the trustee if such dividend income is paid out on an “all employee/similar terms” basis within, say, 30 days; and

• that such receipts by employees are taxed as dividend income, not employment income, in the hands of each recipient.

CGT – levelling the playing-field

12.19 I do not understand why the government has not changed the CGT rules so as to “level the playing-field” as between EBTs with offshore trustees and those with UK resident trustees. It is little wonder that companies wishing to establish an EBT for the purpose of warehousing shares pending their transfer or sale pursuant to an employees’ share scheme are advised to use a non-UK resident trustee to avoid any risk of liability to capital gains tax on the part of the trustee. This puts UK trustee service providers at a disadvantage to their offshore competitors and benefits the economies of the offshore jurisdictions at the expense of the UK share trustee and administration industry.

12.20 Section 144ZA TCGA 1992 has gone some way to removing the risk of UK trustees incurring a liability to CGT when transferring shares pursuant to the exercise of an employee share option. Further, s239ZA TCGA affords relief on a disposal to a beneficiary other than pursuant to a share option, although there are conditions which must be met including that no actual consideration is given for the disposal. It follows that a sale of shares (for example) by an EBT to an employee for a consideration, otherwise than pursuant to an option, will give rise to a CGT liability on the part of the UK trustee.

12.21 There is also uncertainty as to whether the exemption afforded by s239ZA applies if the shares transferred are subject to a short-term risk of forfeiture: whilst the employee may suffer a charge to income tax at a later time when the risk falls away or the shares are sold, there is no charge at the time of the transfer by the trustee (but see the answer to FAQ No. 18 in Tax Bulletin No. 46 which suggests otherwise).

12.22 Clearly there remain circumstances in which transfers by UK trustees of an EBT can give rise to a market value CGT charge when there is no such liability if the transfer were made by an offshore trustee. What is the policy reason for maintaining this more favoured tax treatment for offshore trustees?

…………………………………………………………

David Pett

Temple Tax Chambers                                                                                                  12^th September 2023

What follows supplements the evidence and points made in a meeting with officials on 12^th July 2023.

1. If you are a business owner or manager, what is your business activity, when was your company created, where is it based and how many employees do you have?

[Not applicable]

2. If you are responding on behalf of a representative body or think tank, please briefly describe the body, its objectives, and its members.

The Employee Share Ownership (Esop) Centre is a non-profit subscription-based organisation which draws from over 35 years of experience to inform, research and promote direct employee share ownership in the interest of developing all forms of broad-based employee share ownership plans in the UK and Europe. Its membership includes accountants, administrators, bankers, brokers, consultants, lawyers, registrars, remuneration advisers, and trustees, alongside the companies that issue share plans to their employees.

3. Does your company offer an employee share scheme? If so, which one?

[Not applicable]

4. To what extent do you agree/disagree that SAYE and SIP are fulfilling their policy objectives?

Both SIPs and SAYE share option schemes successfully fulfil the policy of encouraging, enabling and incentivising employees to acquire shares and thereby benefit from growth in value to which they contribute by their labour. They would achieve that objective rather more effectively if the changes mentioned below were made to the governing legislation and if the government took steps to publicise their existence and advantages and enable and encourage their establishment by companies not presently eligible.

SAYE share options have been attractive on the basis that, at least when interest rates on savings have been competitive, the arrangement is “heads I win, tails I do not lose”. That has not been the case for so long as bonus rates have been zero.

5. If you offer SAYE or SIP to your employees, why did you choose to do so? If you are responding as a representative body, please specify your members’ main reasons for offering SAYE or SIP to their employees.

In the case of SAYE in particular, as a way of enabling employees to save and to engender a sense of having a stake in the company – people have to have money to put into these schemes but, nevertheless, they are a good way for perhaps more junior employees, to participate and have the benefit of share participation that they wouldn’t otherwise have. There have been many surveys that have shown that for some employees, the only savings they make will be under an SAYE or SIP and, equally, that starting to save under an SAYE or SIP takes an individual who hasn’t previously had any habit of saving into the idea of saving and creates that ethos of saving and just generally has a more beneficial effect and impact on that individual and their family.

In the case of SIP, the ongoing tax shelter for so long as a participant remains an employee is attractive.

In our experience, members are typically supportive of, and willing to give effect to, the objective of promoting direct employee share ownership and allowing employees to benefit from the growth in value to which they contribute by their labour.

The benefit of a closely-defined and readily-adoptable scheme with a clear path to securing tax-advantages, and no uncertainty as to the tax treatment, is that it allows companies to achieve that objective at a relatively lower cost and with greater certainty, and therefore lower risk, than if they were to establish some form of bespoke employee share scheme, even assuming the company could do so in a tax-advantageous manner. SAYE schemes and SIPs are perceived as providing a “well-trodden path” which companies may follow with a high degree of confidence and low risk.

6. If you have chosen to offer only SIP or SAYE, what were the deciding factors of choosing one over the other? What do you see as the advantages of one over the other?

SAYE options are for a fixed period and, in the case of a private company, consideration has to be given to enabling participants to be able to realise the value of the shares acquired, either immediately at the end of that option period or after holding them as an investment for a further period. Under a SIP, participants may simply allow their plan shares to remain held by the trustee for so long as the employment lasts (although similar consideration must be given at the outset to how shares will be recovered from leavers).

Although a SIP may be operated in a manner similar to an SAYE option, by having a one-year accumulation period for savings, the annual limits are lower.

The (relatively high) costs of engaging a savings carrier mean that SAYE options are in practice of attraction to only the larger employers. Familiarity with SAYE savings contracts, and the perceived ease of administration (it being outsourced to the savings carrier) also mean that large eligible employers appear to favour SAYE options. All things being equal, smaller and private companies tend to favour a SIP, or would do so but for the complexities mentioned below and the fact that companies under the control of private-equity are ineligible – see below.

7. The number of companies using SAYE and SIP has not increased in recent years. In your view, what barriers exist that may impact a company’s decision to offer an employee share scheme? These could be barriers related to specific schemes or wider concerns.

The principal reasons are (i) the fact that companies under the control of private-equity funds are ineligible to adopt such a tax-advantaged scheme and (ii) the perceived complexity, and therefore also the cost of establishment and administration.

The harsh accounting treatment (IFRS2 reporting) has put off some companies from adopting SAYE option schemes.

8. The number of employees using SAYE or SIP has declined in recent years, what do you think has caused that decline? Do you have evidence to support this?

See 7 above. The substantial rise in the proportion of British companies now controlled by private-equity (or venture capital funds, private offices, etc.) inevitably restricts access to such schemes.

In terms of hard evidence and by way of example, Xtrac Limited, a world-leader in motor sports engineering, attributes much of its success to the fact that, when it was independently owned, all employees benefitted from participation in all forms of tax-advantaged schemes (SIPs, SAYE, CSOPs and EMI). Although such employees have continued to benefit from a SIP since the company came under the control of private equity in 2017 (as securities acquired by participants in exchange for plan shares have remained held by the plan trustee sheltered from CGT), that company has since been unable to make awards under a SIP or grant SAYE options. This has been a cause of dissatisfaction on the part of employees as the workforce now comprises “those who benefitted” and “those who could not”.

9. What proportion of employees participate in the share scheme(s) your company offers?

Not applicable, but in the example cited above, all qualifying employees participated in the schemes when they were available.

10. In your view, what are the reasons your employees give for choosing to participate in the scheme? If you are responding as a representative body, please specify what you think are the main reasons employees choose to participate in a share scheme.

The opportunity to benefit financially from the growth in value of the business to which employees contribute by their labours. Once it becomes apparent to those who choose not to participate when a scheme is first established that those who did participate benefit financially, there is typically a “snowballing effect” in that others then choose to participate in later awards/option grants.

An SAYE contract, or SIP accumulation of partnership share money, is a way of saving.  It offers a sense of having a stake in the company – people have to have money to put into these schemes but, nevertheless, they are a good way for perhaps more junior employees, to participate and have the benefit of share participation that they wouldn’t otherwise have and there have been many surveys that have shown that for some employees, the only savings they make will be under an SAYE or SIP and, equally, that starting to save under an SAYE or SIP takes an individual who hasn’t previously had any habit of saving into the idea of saving and creates that ethos of saving and just generally has a more beneficial effect and impact on that individual and their family.

The ongoing tax shelter for so long as a participant in a SIP remains an employee is attractive.

Lack of money is typically cited as the reason why employees choose not to take up SAYE option offers. Consideration should be given to allowing participation in future growth in value by those too impecunious to be able to “pay to play”.

SIP awards of Free Shares, even if subject to forfeiture if an employee leaves (or is a “bad” leaver) and subject also, in the case of an unquoted company, to provisions in the company’s articles whereby the shares can be recovered from “good” leavers, are seen by employees of independent unquoted companies as an attractive risk-free, and cost-free (at least to the employees), means of participating and benefitting as shareholders. Awards of Free (and invitations to acquire Partnership) shares in a start-up company with modest value at the early stage of a new venture are seen by early-stage employees as potentially highly valuable – and highly tax-advantageous – if the company grows in value.

11. What changes, if any, would increase participation amongst employees or change the way your company uses or offers the schemes?

Simplification: removing the 3-year/5-year differential in tax treatment of the withdrawal (etc) of SIP award shares. This would align the period for which the shares must be held in the SIP, to secure tax relief on withdrawal/sale, with the minimum holding period for free and matching shares.

Increasing the accumulation period for SIP awards of partnership shares from one to three years.

Increasing the annual limits on participation in a SIP and the limit on monthly SAYE savings.

Allowing savings contributions to an SAYE share option-linked savings contract (if made by deduction from earnings) to be made out of pre-tax earnings (as are savings accumulated to acquire partnership shares under a SIP).

Treating a participant who resigns voluntarily at any time as a “good leaver” so as to allow access to savings on a tax-free basis.

Enabling a company to cap the initial value of shares awarded to long-serving employees under a SIP so that invitations may be made to new joiners without thereby increasing participation by existing employees who have already been awarded shares up to a specified limit.

12. In your view, is awareness of the benefits of SAYE and SIP low? How could the government and other groups raise awareness?

Reduce complexity:

The perceived complexity of SIPs in particular means there is a reluctance on the part of (smaller or less experienced) advisers of small and private companies to educate themselves and their clients of the benefits. Those who do have found the promotion of SIPs in particular to generate good business for themselves as well as advantages for their clients. The fact that a SIP can be operated by offering awards of shares on the basis that if a participant leaves for any reason, he or she must forfeit free shares and offer back for sale to the SIP, the company, other employees or an employees’ trust or other shareholder on a “no gain” basis means that significant benefits, in the form of tax free profit upon a sale of the company, can be offered at no effective cost to existing proprietors. This is a scenario which should be more effectively communicated to advisers.

Publish model company documentation:

The precedent documentation published by HMRC covers only half the picture: a private company establishing a SIP or SAYE scheme needs to give thought to amending its articles of association (and possibly also any shareholders’ agreement) to take account of the acquisition of shares by employees. It would be helpful if HMRC, or the Dept. for Business & Trade, would publish model documentation which could be used as a starting point for smaller companies thereby reducing the costs and avoiding such companies falling into “traps” because of having adopted a scheme without due consideration of how employees who acquire shares can in due course realise the value of those shares.

13. In your view, how easy or difficult is it to operate or administer SAYE and SIP? Please explain your answer and specify any ways in which the schemes could be simplified.

SAYE options:

The cost of engaging a savings carrier, and the limited choice of providers, makes administration relatively expensive and therefore of little or no attraction to smaller companies. Larger, listed, companies find SAYE schemes easier to administer, perhaps because much of the burden is outsourced to the independent savings carrier/administrator.

There needs to be greater leaver flexibility within an SAYE share option scheme. Companies should have the flexibility to designate an employee who resigns as a ‘good leaver’. At the moment it is absolutely clear that an employee who resigns is classed as a bad leaver.  Extending the category of “good leavers” allows such participants to benefit to the extent that they have accumulated savings. This would encourage a greater rate of take-up.

SIPs:

As above, larger companies will outsource administration to an administrator. Despite the need for a trust, the apparent complexity of the SIP Code and of the published precedents of rules, the experience of smaller companies which have established a SIP suggests that they can be easily administered “in-house” and at relatively low cost. Private companies will generally make awards only on an annual or occasional basis, or possibly a “one-off” basis, rather than on a continuous basis (with regular monthly share acquisitions). The need for time and attention typically arises in relation to annual HMRC reporting, leavers and to administering the buy-back of shares, rather than to the up-front award of shares.

The administrative burden could be reduced by removing the requirement that the maximum annual value of partnership shares must be restricted to 10% of salary if less than £1,800. It is difficult to see what practical safeguard is afforded by this requirement which is difficult to monitor on a continuing basis.

14. Do you feel SAYE and SIP offer enough flexibility to adapt to individual companies’ circumstances? If not, please state why.

As mentioned above, the fact that companies under the control of another body corporate are ineligible typically counts out those companies now owned by private-equity.

See also the points made at 11 above.

Neither scheme allows for participation by “gig economy” workers, which excludes a substantial proportion of those who contribute to growth by the provision of personal services. Extending participation to such workers would necessarily require also changes to company laws to extend the definition of an “employees’ share scheme” to include individuals who provide personal services otherwise than as an employee.

It would make it easier for companies to ensure compliance with company law requirements, and reflect widespread practice of non-executive directors excluding themselves from participation, if eligibility to be granted SAYE options excluded directors who are not employees. This would ensure consistency with eligibility to participate in SIPs.

Is there any policy reason not to remove the requirement in para 22, Sch 3 ITEPA that shares under SAYE options must be either employee-control shares or “open market” shares – in the same way that the equivalent restriction on CSOP options has now been removed?

15. Does your company make use of the current flexibility within the scheme rules? Do they vary the terms on which the employees participate? If so, in what ways?

Member companies typically do take advantage of such flexibilities by, for example, restricting SIP awards to below the statutory limits. However, we are not aware of any company which has chosen to make performance-related awards of free shares as the rules governing such awards are perceived as too complex.

Typically, companies offering matching shares do so on a basis which is more restrictive than the statutory limit of 2 for 1.

Private companies variously offer free, and/or partnership shares (with or without matching shares) on either a single occasion, or on an ad hoc basis, rather than, as larger companies do, offering on a continuous (rolling) or an annual basis.

SAYE options tend to be offered to qualifying employees each year on a more consistent basis, although limits are from time to time imposed upon the maximum amount of monthly savings (so as to restrict the aggregate number of shares which may be acquired).

Many companies choose not to set the option exercise price at the full 20% discount permitted.

16. Does participation in SAYE or SIP amongst employees vary according to remuneration? If so, in what ways?

Yes, in the sense that higher paid employees will tend to recognise the potential financial benefits of participation and be more able to afford to participate.

Currently, employees with less money have to wait longer (5 years under a SIP) for the tax advantage than executives with EMI or CSOP options. Reducing the time employees have to hold shares in a SIP in order to qualify for tax breaks from five to three years, would boost take up. Three years is the norm in other schemes.

SIP awards of free shares are commonly made on a basis which differentiates according to length of service/hours worked/level of basic salary as this is perceived as “fair”. A cap on levels of participation in partnership shares may also be imposed if otherwise the benefits would be too much in favour of senior staff.

17. In your view, does employee motivation or the reasons for participating in a share scheme vary according to different levels of remuneration? If so, in what ways?

Participation is principally a factor of communication. Effective communication leads to higher take-up.

18. If you are a company or a scheme user, does your company currently make use of the flexibility of the rules and vary the terms on which your employees participate according to remuneration?

Our understanding of the practices of member companies and issuers is that they do.

19. In your view, are SAYE and SIP appropriately targeted towards lower- and middle-income earners?

Yes, but…many lower paid or less affluent employees are unable to afford to participate in the acquisition of partnership shares or by way of putting aside monthly savings out of earnings.

Lower-paid employees (i.e. those earning a basic salary of less than a specified amount) could be supported by amending the SIP rules to allow companies to make to such employees (only) an annual or single “stand-alone” award of free shares, up to a statutory limit of, say, £3,600, which may be withdrawn from the SIP after only one year and will not be forfeited (and may remain in the SIP and sheltered from CGT and with no income tax) if the employee leaves for any reason after a qualifying (post-award) period of, say, 3 months.

20. In your view, what barriers exist that might prevent lower income earners from participating in an employee share scheme?

See the response to 19 above.

It is difficult to see a policy reason why companies are prevented from offering payment of a (taxed) cash bonus as an alternative to participation in an award of free shares under a SIP.

SAYE share option schemes enable an independent company to offer to all its qualifying employees the opportunity to acquire shares on favourable terms by the exercise of options. Option gains are free of income tax but are not free of capital gains tax. Nevertheless, as the average gains realised by employee participants has typically been below the annual CGT exempt amount (£11,800 in the period of 5 years to 2021 according to published HMRC statistics), the fact that such gains are within the charge to CGT has been of little consequence.

The substantial reduction in the annual CGT amount, to £6,000 for the current tax year and to £3,000 for the next tax year (2024/25), will mean that a great many SAYE share option scheme participants will become liable to pay CGT on gains on the sale of SAYE option shares.

Further, many such employees, particularly those who are lower-paid and unfamiliar with the responsibilities of accounting for tax on non-PAYE earnings and gains, will now be required to submit a self-assessment tax return, or otherwise report gains via HMRC’s ‘real time’ service, by reason only of having exercised an SAYE share option and sold the shares acquired.

We envisage that many such employees will be at risk of penalties for failure to report or submit a return because they will not appreciate the need to do so by reason only of the sale of shares acquired on exercise of an SAYE share option. The cost of obtaining professional advice on reporting or completing a tax return will also impose a disproportionate financial burden on such employees.

Inclusion in the next Finance Bill of a provision which exempts from CGT any amount of gain (or an amount of gain up to, say, £12,000 per year) realised upon the disposal of shares acquired pursuant to a SAYE share option, would go a long way to restoring the former attractiveness of SAYE share options, for lower-paid employees in particular, and avoid what could become a significant compliance issue as a consequence of the need for employees to report chargeable gains on SAYE option share disposals.

A further potential barrier to take-up is the recent reduction in the tax-free allowance for dividend income, which will drop from £2,000 last year to £500 in 2024-25, meaning many relatively low earners paid dividends through a SIP could be required to fill out a self-assessment tax return for the first time or contact HMRC to have their PAYE tax code adjusted.

This will be a trap for many and we anticipate a large number of penalties being unwittingly incurred for failure to do so. This administrative burden (for HMRC as much as for individuals) could be relieved by:

 – exempting from CGT gains of up to, say, £12,000 realised by the sale of shares acquired pursuant to the exercise of SAYE share options; and

 – providing that cash dividends on SIP shares are exempt from income tax (so as to put the taxation of SIP share dividends on the same basis as shares held in an ISA).

21. What other performance incentives does your company offer? How do these compare to SAYE and SIP?

Not applicable – although most, if not all, companies known to us to operate SAYE and/or SIPs will, if eligible to do so, also grant (preferably) EMI, or CSOP, share options to selected key employees.

22. In your view, how are SAYE and SIP valued by employees compared to other forms of remuneration or incentive?

If appropriately communicated to eligible employees, and if the company is financially successful, they are highly valued – at least, once the initial cohort of participants have realised significant gains in consequence of exercising options and selling shares, or possibly in consequence of a corporate transaction allowing an opportunity for early exercise or for cashing in their SIP shares.

A substantial benefit of a SIP in a private company lies in the fact that there exists a substantial margin for a fall in the market value of the company as a whole without participating employees losing out having acquired partnership shares. The fact that partnership shares are acquired out of pre-tax salary, coupled with HMRC’s practice of accepting that the market value of a small holding in a private company may be set at up to 75-80% less than the pro rata value of the shares, means that, in effect, partnership shares may be acquired at a very substantial discount. If the company is later sold, and participants receive a consideration for their SIP shares equal to the pro rata value, the uplift is entirely free of tax. Properly understood and communicated, this is a highly attractive feature of SIP awards for private companies.

23. Would your company have granted options or awards to employees outside of SAYE or SIP in the absence of those schemes?

Not applicable – but…as the taxation of unapproved share option gains is so unattractive when compared with that of tax-advantaged share options and with the tax treatment afforded to other individual investors, it is reasonable to infer that the tax advantages of SIPs (in particular) and SAYE share options are a principal reason why companies, particularly private companies, choose to establish them.

The award of shares and grant of options under a SIP or SAYE scheme allows companies to agree share values with HMRC, and a SIP enables the operation of an internal market with the certainty as to tax values which this gives.

24. Is there any other information you would like to share with us in relation to these schemes?

We would summarise the principal points as follows:

• Private-equity owned companies should be eligible to establish a SIP. There are many companies which have had a SIP but can no longer operate a SIP having come under the control of private equity – see the example above.

• There should be a single (3-year) period governing relief from IT, rather than the 3/5 year periods, which serve only to obfuscate and confuse all parties.

• There is a need for a better suite of pro forma documentation, including extracts from articles of a private company, to assist smaller companies to establish a SIP (compare the model documentation for companies with employee shareholders issued by Dept. for Business in 2013).

• Companies should be able to offer a cash alternative to participation in SIP free share awards. What is the policy objection to this?

• Eligibility should be extended to gig economy workers i.e. all those who provide personal services to the company/group, with liaison with other Departments to ensure that regulatory hurdles are overcome.

Other points (including those made in the course of the stakeholder meeting with officials on 12^th July 2023):

Re SIPs:

• Few, if any companies take advantage of the ability to make performance-related free share awards – could that be simplified/removed?
• The reduction in the number of companies operating a SIP can be partly explained by the trend for Private Equity to take control of UK PLC.
• Any complexity in a SIP is more perceived than real as standard form documentation can be used and, in principle, a SIP for up to, say, 50 employees can be administered on a spreadsheet.
• Small companies use individuals as trustees (despite the risks of unlimited personal liability).
• The ongoing tax shelter afforded by a SIP for a participant’s plan shares for so long as the participant remains an employee is attractive.
• For those companies which have woken up to the benefits of a SIP, it has proved its worth – perhaps because of the margin for failure of share price growth in the case of unlisted companies for which a 75%+ discount on MV, coupled with the funds being out of pre-tax earnings, make it very attractive, particularly if the company is sold as a whole.
• The fact that private company articles of association can provide for forfeiture of free shares if an employee leaves at any time for any reason, and for partnership shares to be offered back for sale on a no-gain basis if the participant leaves, means there is “no skin off the nose of the proprietors” in offering free and/or partnership shares under a SIP where the intention is for the shares to be held until the company is sold.
• Allow good leavers to leave their SIP award shares in the custody of the plan trustee for a period of up to, say, 3 years during which time they remain sheltered from CGT. This allows for an orderly and planned disposal over time in circumstances in which, for reasons outside the control of the participant, the value of the shares may have temporarily fallen. This would enhance the attraction of SIPs as a vehicle for employee investment and participation.

Re SAYE options:

• These are of interest to larger listed company employers only.
• The costs of a savings provider make them unattractive to other employers.
• There is a limited number of savings providers now that Yorkshire Building Society has withdrawn (apparently there are none in the Republic of Ireland, hence there being no new Irish SAYE schemes under their legislation).
• To address the tendency towards shorter-term employments, allow voluntary resignation to be treated as if the participant is a “good leaver” enabling access to a tax-free sum.
• Alternatively, enable a 1-year savings contract linked to a one-year share option – on the basis that 3 or 5 years is too long given the tendency towards shorter-term employments.
• Demergers: para 28(3), Sch 3 should be amended to allow appropriate adjustments to options to be made unilaterally in the event of a demerger (and see further below).
• Internal reorganisations by the interposition of a new holding company: allow an automatic exchange of equivalent share options without the need for agreement to be obtained from optionholders (as presently required by para 38, Sch 3).

Re SAYE and SIPs

• Takeovers: there is a need to revisit the rules allowing exemption from income tax on a takeover if participants are only entitled to receive cash and no other form of consideration for their SIP shares. Difficulties arise if, for example, the consideration is on a deferred or “earn-out” basis, or if the terms of the transaction are such that, regardless of the concerns for the tax treatment of the target company SIP and SAYE participants, the acquiring company allows participants (along with all other shareholders) to elect to take cash or shares/loan notes or other securities. Participants can be penalised through no fault or choice of themselves or their employer or plan company. This is unfair.
• Demergers: the rules governing when demerged companies cease to be “associated” should be simplified so that for the purposes (only) of a SIP or SAYE scheme, listed and AIM companies are treated as ceasing to be associated upon completion of a demerger and not at such later time as when they cease to be under common control (a point in time which it is difficult, if not impossible, for listed/AIM companies to monitor and identify).

…………………………………………………………………

The Esop Centre                                                                                                                     

24^th August 2023