The government has released a summary of the responses to its 'Modernisation of stamp taxes on shares: Call for evidence'. 

The Call for evidence sought stakeholder feedback on the principles and design of a new Stamp Duty (SD) and Stamp Duty Reserve Tax (SDRT) (collectively Stamp Taxes on Shares (STS)) framework to help inform the longer term modernisation of theses duties.

Feedback included:

  • Any new system should be simple, easy to use and provide clarity and certainty.
  • Half of respondents thought there should be a single self-assessed tax on securities merging SD and SDRT.
  • A self-assessment system could achieve greater efficiency and the SDLT system could be a potential model.
  • Piecemeal reform could add to complexity and cause confusion and an increased burden for customers and their advisors, a wholesale change was preferred.
  • Most respondents said the top priority is the removal of the requirement for a physical stamp and permanent adoption of COVID-19 temporary processes, including electronic signatures, which were well received.
  • Other priorities included:
    • An electronic filing and payment system.
    • Making the amending of share registers more straightforward and efficient.
    • Amending territorial scope of SD to align with SDRT.
    • Extension of SD reliefs to SDRT.
    • Raising the de minimis limit.
  • Nearly 80% of respondents thought the tie between the payment of SD and the registration of share title was redundant.
  • 79% of respondents expected residual securities to be settled by a Stock Transfer Form (STF).
  • Half of respondents thought replicating SDRT payments and enforcement for STS would be beneficial.
  • Making the tax compulsory and clearly identifying liability would be beneficial.
  • Only 23% of respondents thought the current SD payment and enforcement framework was appropriate.
  • A more efficient system would have:
    • A fully virtual STS system that is self-assessed and policed by enquiry and enforcement, with penalties and interest where appropriate.
    • The ability to update company share registers on receipt of a UTRN or notification from HMRC.
    • Clear legislation and guidance.
  • Most respondents envisaged that share transfers in the future would be held and transferred electronically.
  • 72% of respondents thought an STF was not necessary.
  • Almost half of respondents envisage using distributed ledger technology in the future to hold share ownership arrangements.
  • Any new framework should be future proofed for the use of smart contracts.
  • Holes in the existing legislation included:
    • Rules on contingent, deferred or unascertainable consideration.
    • The use of unsuitable language for a modern tax.
    • Rules for the granting of options, securities in overseas companies and non-marketable debentures.
    • Certainty on the removal of the 1.5% charge on issuance into a clearance or depositary receipt service.

Action following the Call for Evidence

  • On 18 June 2021 HMRC announced the removal of the requirement to physically stamp documents, this will apply from 19 July 2021.

Next steps:

  • HMRC will explore the feasibility and implications associated with the key priority areas identified.
  • HMRC will set up a working group to work with stakeholders to help inform the development of policy proposals and to frame subsequent consultation documents.

Useful guides on this topic

Shares, securities & options: tax compliance
What are the filing requirements for share-based remuneration? What needs reporting? When does it need reporting?  What penalties are there for late filing?

Modernisation of stamp taxes on shares: Call for evidence
The government has launched ‘Modernisation of the stamp taxes on shares framework: call for evidence’. The consultation is seeking views on the principles and design of a new framework for taxing shares and securities under Stamp Duty and Stamp Duty Reserve Tax (SDRT), as well as consideration on any modernisation programme.

External Link

Modernisation of the Stamp Taxes on Shares Framework: summary of responses


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