Call or put option? In a 'call' option the buyer will have control as it can ‘call’ for the transfer of the property. Ensure that the seller is aware that its plans for the property may be restricted. A 'put' option gives the seller control in that it can ‘put’ the property on the buyer buying requiring the buyer to purchase the property. Option period In the case of a call option, a seller should note that the property may be sterilised for the duration of the option period. For this reason the seller should ensure that the agreement includes a clear long-stop date. Note that Perpetuities and Accumulations Act 2009 (PAA 2009) disapplied the rule against perpetuities for options and so options granted after 6 April 2010 need not specify a long stop date. Prior to PAA 2009, a call option would be void if not exercised within 21 years. If the exercise of the option is conditional on the buyer obtaining planning permission ensure that any provisions allowing the extension of the option period to cater

Call options are frequently used by developers to secure a right to buy land if planning permission is obtained. Taking an option provides the developer with time to make and pursue a planning application before having to commit to paying for the land. The developer's initial outlay will be limited to payment of an option fee, which is essentially the sum agreed with the landowner as the price for agreeing not to sell the land elsewhere while the developer seeks planning permission. The developer is likely to incur significant expense in making and pursuing a planning application. High on the developer's list of priorities will be the inclusion of clauses allowing the developer to extend the option period if the planning process is still underway. Unless the option agreement or contract specifically allows for extensions of time, the time limit must be strictly adhered to (for further guidance, see Practice Note: Options agreements—land—extending time for exercise). Option agreements commonly provide that the option period can be extended where: • an application has been made, but no

This Agreement is made on [insert date] Parties 1 [Name of issuing company], incorporated in England and Wales under number [company number] whose registered office is at [address], brief particulars of which are set out in Schedule 1 (Company), 2 The several persons whose names and addresses are set out in Schedule 2 (together, Shareholders), 3 [Name of Optionholder] [incorporated in England and Wales under number [company number] whose registered office is at/of [address]] (Optionholder) (each being a Party and together the Parties). BACKGROUND (A) The Company is a private company limited by shares. (B) [The Optionholder has agreed to extend loan facilities to [the Company] upon and subject to the terms and conditions of the [loan agreement between the Company and the Optionholder OR loan note instrument] dated [[insert date] OR the same date as this Agreement].] (C) The Company has agreed to grant to the Optionholder an option to subscribe for new shares in the capital of the Company on the terms and conditions set out in this Agreement. The parties agree: 1 Definitions and interpretation 1.1 In this Agreement, unless the context otherwise requires the following expressions shall have the following meanings: Business

An option is an agreement whereby the person with the benefit of the option has the right, exclusively, to purchase a property, usually at a price that has been agreed or that is to be determined by way of a formula. Options can be extremely useful, for example because a developer wishes to secure land for the future, but without incurring significant up front expenses, as usually a (relatively) small fee will be paid to secure the option. Prior to 6 April 2010 (the commencement date of the Perpetuities and Accumulations Act 2009 (PAA 2009)), an option was valid only for a period of 21 years, by virtue of section 9(2) of the Perpetuities

This Practice Note is about the disapplication of the VAT option to tax (see Practice Note: The option to tax land and buildings) for residential and some other property. It does not cover disapplication under the anti-avoidance rules (see Practice Note: Option to tax—disapplication under anti-avoidance rules). Why does this matter? If the rules apply, they override an option to tax and make a sale or lease exempt. In most cases where they are relevant, the buyer or tenant would not be able to recover the VAT, so this can be an important benefit. But the rules also mean that the seller or landlord cannot recover related VAT, and might incur a cost under the capital goods scheme (CGS) (see Practice Note: VAT—capital goods scheme (CGS)). This needs to be factored in to any transaction. In many cases, the parties have a choice as to whether the option is disapplied. It is best if this is the subject of negotiation, and there will sometimes be alternative ways of avoiding a VAT cost. The

This Practice Note is about the disapplication of the VAT option to tax (see Practice Note: The option to tax land and buildings) under anti-avoidance rules. Why does this matter? If the tests described in this Practice Note are met, the option to tax is automatically disapplied. The parties do not have a choice in the matter, nor does there need to be any avoidance motive. Accordingly, the option is sometimes disapplied in normal commercial transactions, so that considerable care may be needed. The effect of the rules is to override an option to tax and make a sale or lease exempt, so that the seller or landlord cannot recover VAT related to the property. The impact can be particularly serious for property developers. The rules are also relevant in the context of a transfer of a going concern (TOGC) (see Practice Note: VAT—transfers of a going concern involving land and buildings), and they are sometimes triggered deliberately so that a transaction can be exempt from VAT. The effect of disapplication is to suspend the option,

A measure of the difference between the yield available on a given bond and that on otherwise comparable risk-free bonds, allowing for any options embedded in the bond.

What are optional remuneration arrangements? The rules surrounding Optional Remuneration Arrangements (‘OpRAs’) were introduced by the Finance Act 2017 and have applied since 6 April 2017. Transitional provisions were provided for arrangements already existing at the time of the introduction of the rules. Broadly, the OpRA rules capture arrangements for the provision of benefits to employees who either give up a right to earnings, or agree to be provided with a benefit instead of receiving earnings. The result of the OpRA rules was to withdraw the tax benefits of such arrangements. HMRC states that the rules were introduced in order to ‘redress the advantages that use of these arrangements allowed’ and, as such, to prevent employees paying less income tax and National Insurance contributions (NICs) as compared to their liability if the same benefit was paid wholly in cash earnings. However, the rules apply for the purposes of income tax and for calculating the amount subject to NICs. The rules do not make any attempt to change the class of NICs that apply, meaning

A person who holds an option which has not been exercised. The option may have been bought for value, or granted without consideration under an employees’ share scheme.

The right, but not the obligation, to buy or sell a fixed quantity of a commodity, currency or security at a fixed price, on or until a particular date.

Unless an option agreement or contract specifically allows for extensions of time, the time limit must be strictly adhered to. It cannot be extended by reference to equitable principles, nor can the buyer unilaterally vary the terms of a contract. Extension must be by waiver or by express agreement. The seller (or the buyer in rare cases where the time limit has been inserted purely for the benefit of the buyer, eg where a contract is conditional on the obtaining of planning permission by the seller by a certain date) can waive the right to insist on performance by the stipulated time and allow an extension. For further guidance in relation to the need for a long-stop date, see Practice Note: Option agreements—land—the need for a long-stop date. Waiver Waiver has the effect of substituting the extended time for the original time limit. If time is of the essence in respect of the original longstop date it will

Options for landlord This checklist sets out the options for a landlord with an insolvent corporate tenant and the impact of the restrictions under the different insolvency regimes. Where a landlord is seeking to take action against an insolvent corporate tenant, this checklist should be consulted to confirm whether the landlord is permitted to take such action. Type of insolvency process Type of action During CVA when approved Post-CVA new debt (subject always to express terms of the CVA) Administrative / LPA / fixed charge receivership Administration Members’