ACCOUNTANTS Baker Tilly are again warning companies to ensure they comply with new tax disclosure requirements for share benefits provided to employees - or face hefty fines.

The new tax rules require employers to file form 42 with the Inland Revenue by July 6, if shares or securities have been provided to employees as benefits during the year ended 5 April 2004, or value has been passed to employees through them.

Dianne Simpson-Price, tax partner at Baker Tilly, said: "The Inland Revenue has warned that it will enforce the new tax rules with substantial penalties.

"If a company misses the deadline, it will be fined £300 per reportable event, with a daily penalty of £60 per reportable event for continued failure.

"In the case of a company that has provided these benefits to 100 employees, there are 100 reportable events, so missing the deadline will produce an immediate penalty of £30,000."

She said there were some exceptions, but there was a "sting in the tail for the hundreds of thousands of businesses that have incorporated to take advantage of the zero rate of corporation tax.

"On the face of it, shares issued when these businesses incorporated should not give rise to tax charges under the new rules - the tax charge is separate from the reporting requirements.

"But even if no tax charge arises because of the issue of these shares, small companies which find themselves in this position should also consider filing form 42.

"If they do not, and the Revenue subsequently decides that a return should have been made, there would be a minimum £600 penalty for a typical husband and wife company."

She added: "Share options and incentives offer valuable benefits to employees and companies alike, but skilled advice must be sought to ensure that the most appropriate scheme is selected by a company, and the pitfalls avoided."