Stsm053080 - depositary receipt and clearance services: 1. 5 per cent higher rate charge: changes from 1 january 2024 - hmrc internal manual

STSM053080 - DEPOSITARY RECEIPT AND CLEARANCE SERVICES: 1.5 PER CENT HIGHER RATE CHARGE: CHANGES FROM 1 JANUARY 2024 BACKGROUND Following EU (HSBC Holdings plc and Vidacos 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 the 1.5% Stamp Duty and SDRT charges on the issue of

securities and certain  transfers (referred to as transfers integral to capital raising) were incompatible with the Capital Duties Directive (Council Directive 2008/7/EC of 12 February 2008

concerning indirect taxes on the raising of capital, and the predecessor directive, Council Directive 69/335/EEC of 17 July 1969). Following this, in a 2017 decision the Court 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 of shares on a stock

exchange. UK legislation providing for the charge on transactions of the types covered in these cases was not originally amended as taxpayers were able to rely on the direct effect of EU law

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

to prevent the 1.5% charge being reintroduced for these transactions. The 1.5% charge on the issue of UK securities into depositary receipt systems and clearance services and on certain

transfers into depositary receipt systems and clearance services was removed from domestic legislation with effect from 1 January 2024. MAIN PROVISIONS/ MEASURES/ CHANGES * The 1.5% SDRT

charge on issues of chargeable securities to depositary receipt issuers (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: * Section 97AD FA1986 introduces a specific exemption from the 1.5% charge on transfers of treasury shares to a clearance service or depositary receipt issuer – see 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). Previous page Next page Print this page