STSM053080 - Depositary receipt and clearance services: 1.5 per cent higher rate charge: changes from 1 January 2024 - HMRC internal manual - GOV.UK

STSM053080 - Depositary receipt and clearance services: 1.5 per cent higher rate charge: changes from 1 January 2024 Background

Following EU (HSBC Holdings plc andVidacos Nominees Ltd v HMRC)  and UK (HSBC Holdings plc and The Bank of New York Mellon v HMRC) court decisions in 2009 and 2012, HMRC recognised that

the1.5% Stamp Duty and SDRT charges on the issue of securities and certain  transfers (referred to as transfers integralto capital raising) were incompatible with the Capital Duties

Directive (Council Directive 2008/7/EC of 12 February 2008concerning indirect taxes on the raising of capital, and the predecessordirective, Council Directive 69/335/EEC of 17 July 1969).

Following this, in a 2017 decision theCourt of Justice of the European Union ruled in the Air Berlin case that no 1.5%charge applied on the transfer of legal title in chargeable securities

in connection with the listing ofshares on a stock exchange.

UKlegislation providing for the charge on transactions of the typescovered in these cases was not originally amended as taxpayers wereable to rely on the direct effect of EU law up to and

including 31 December2023. However, the changes in the Retained EU Law(Revocation and Reform) Act 2023 meant that this would no longer be the case, soUK legislation was amended to prevent

the 1.5% charge being reintroduced forthese transactions.

The 1.5% charge on the issue of UKsecurities into depositary receipt systems and clearance services and on certain transfers into depositary receiptsystems and clearance services was removed

from domestic legislation witheffect from 1 January 2024.

(section 93 FA1986) and clearance services (section 96 FA1986) is removed – see STSM053090 for more information.No 1.5% charge to SDRT or Stamp Duty will arise on:An “exempt capital raising

transfer” (SDRT) or an “exempt capital raising instrument” (Stamp Duty) – see STSM053100 for more information.An “exempt listing transfer” (SDRT) or an “exempt listing instrument” (Stamp

Duty) – see STSM053110 for more information.Other and consequential provisions/ measures/ changes

These include:

STSM053120. The section 97C FA1986 exception to the exemption from the 1.5% charge on transfers between clearance services and depositary receipt issuers (see STSM057010) is removed. The

charge on the issue of bearer instruments in paragraph 1 of Schedule 15 FA1999 is removed (see STSM061060).

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