Stamp taxes modernisation review: our response

HMRC published a call for evidence on 21 July 2020 entitled "Modernisation of the Stamp Taxes on Shares Framework" relating to the principles and design of a new Stamp Duty and Stamp Duty Reserve Tax (SDRT) Framework. For more details, see "Call for Evidence on the modernisation of stamp taxes on shares". We have now responded to this Call for Evidence, focussing on the principles and design of a new framework for taxing shares and securities.

In particular, our response recommends that the core guiding principles for a new regime should include simplification of the scope of the charge - for example making the charge more explicitly territorial in scope as applying only to UK companies/issuers, rather than applying to e.g. shares of a US corporation where the relevant instrument of transfer happens to be executed here.

We also recommend reviewing the extent of the charge to non-equity interests - in particular, reviewing whether (for example) all instruments issued by UK securitisation companies should be exempt, rather than having a narrow exception for limited recourse instruments and reviewing the application of the charge to transfers of partnership/LLP interests.

We also stress that reliefs and exemptions should be fit for purpose - in particular commonly used reliefs/exemptions such as group relief and merger relief, where technical issues can arise in practice which can prevent the relief applying.

Simplifying the administration and collection of tax and the maintenance of appropriate records through the introduction of an online portal and ensuring that any system can deal with dematerialised interests / the use of current or future technologies such as distributed ledger technology to represent transferable ownership interests in relevant assets are also important features in our view.

Finally, whilst we recognise that it would be a larger piece of work, in the long run, our preference would be for a single system to replace both stamp duty and stamp duty reserve tax.

To read a copy of our response in full, please click here.