Guidance

Relief from Stamp Duty in respect of instruments effecting intra-group transfers of stock or marketable securities

Updated 16 July 2021

1. Section 42 Finance Act 1930, as amended

This note is a short guide on how to make a claim to relief from Stamp Duty in respect of instruments effecting certain transactions between companies in the same group. It does not cover all the points that can arise. For more detailed information, read the Stamp Taxes on shares manual.

2. Intra-Group transfers

An instrument which has the effect of passing a beneficial interest in property between bodies corporate in the same group, which would otherwise be chargeable with Stamp Duty as a transfer on sale, will not be chargeable with duty provided that:

• a valid claim for relief is made under the provisions of Section 42 of the Finance Act 1930, as amended by section 27 of the Finance Act 1967 and section 123 of the Finance Act 2000
• confirmation of relief is given by HMRC Stamp Office following adjudication of the claim

3. Body corporate

A ‘body corporate’ is one which has perpetual succession and a legal personality distinct from that of its members. In the UK, a body corporate include:

• companies with limited or unlimited liability
• companies limited by guarantee
• charter companies
• bodies created by statute

The relief is not restricted to a body corporate situated in the UK and is available to non-UK companies which the applicant can show are bodies corporate within the meaning of the legislation. A pre-approved list can be found in the Stamp Taxes on shares manual.

3.1 Associated bodies corporate

One body corporate is associated with another if all of the following conditions are met:

a) The first is the beneficial owner of not less than 75% of the ordinary share capital of the second, or a third body corporate is the beneficial owner of not less than 75% of the ordinary share capital of each.

b) The first is beneficially entitled to not less than 75% of any profits available for distribution to equity holders of the second body.

c) The first would be beneficially entitled to not less than 75% of any assets of the second available for distribution to its equity holders on a winding up.

Ordinary share capital means all the issued share capital of whatever description, except capital the holders of which are entitled to a fixed dividend but have no other right to a share in the profits of the body corporate.

The association can be direct or through intermediate companies. A claim can, for example, be made for transactions between either:

• A and B if there’s a direct relationship
• between B and C, which are both associated with A, provided that the relationship with A meets the required test

In cases of doubt applicants are encouraged to read the section ‘Bars to Relief and failed claims’ in the Stamp Taxes on shares manual.

4. How to claim Stamp Duty relief

All instruments on which a claim to relief under section 42 is made, need to be submitted for formal adjudication under section 12 of the Stamp Act 1891, together with all relevant supporting documentation.

To do this, email your claim to HMRC at: [email protected].

The email should include:

• an electronic letter of claim (for example, a scanned PDF), signed by either a named:
  • board member of the company through which the associated company relationship is being established
  • solicitor or accountant acting on behalf of the parent company (in such cases evidence of authorisation by the company should be provided)
• an electronic copy of your stock transfer form or other instrument of transfer (for example, a scanned PDF)
• the supporting evidence – find out more about what you need to provide

The signatory must be aware of the full facts and circumstances of the transaction as set out in the letter from personal knowledge – phrases such as “I am advised” or “to the best of my knowledge and belief” are not acceptable.

The claim and stock transfer form or instrument of transfer should be fully completed, signed and dated (use power of attorney if necessary). HMRC accept e-signatures.

If you cannot get your claim letter, stock transfer form or other instrument of transfer signed and dated email [email protected].

If the instrument of transfer used to effect the transfer is not a stock transfer form, you should only send the relevant part of the instrument that effects the transfer.

You should also include electronic versions of any relevant documents. To help minimise file sizes HMRC will only require a list of shareholders and the shares they hold (including class of shares) for each company rather than copies of full registers of members (unless we specifically request them).

4.1 If you’ve not submitted a Stamp Duty notification or claim by email before

You should be aware and accept that there are risks in using email, including:

• emails sent over the internet or other insecure network may be intercepted
• an unencrypted email can be intercepted, read and altered
• it cannot be guaranteed that an unencrypted email received over an insecure network has not been altered
• phishing, impersonation and malware could contain malicious code
• an email sent over the internet may never arrive, and neither the sender or recipient may be aware of this

You can find more general information on our data protection and policy procedures in the HMRC Privacy Notice.

4.2 If you cannot submit your claim electronically

You can post your claim to:

BT – Stamp Duty
HM Revenue and Customs
BX9 1HD
United Kingdom

Couriers should use a different address. You must not post original copies of documents to these addresses, as we will not retain or return them to you.

4.3 Information to include in the claim

The letter of claim needs to include all of the following:

1) A statement that a claim for relief from Stamp Duty under Part 1 of Schedule 13 of the Finance Act 1999 (transfer on sale) is made under section of the 42 Finance Act 1930, as amended, in respect of the specified instruments.

2) Details of the dates of all instruments on which relief is claimed.

3) Details of the authorised and issued share capital of the parent and subsidiary companies, and of any intermediate companies through which the relationship required under the legislation is traced.

4) In the case of non-UK companies, include sufficient information to show they qualify as bodies corporate for the purposes of the relief. A list of non-UK entities previously accepted as bodies corporate can be found in the Stamp Taxes on shares manual.

5) If the parties to the instrument(s) on which relief is claimed are indirectly associated, a family tree diagram should be supplied, showing the percentage of ownership for each branch.

6) State if any class of share carries a right to only a fixed dividend and no other share in the profits.

7) If there is more than one class of share in issue, set out the profit rights attached to each class of share, and set out the asset distribution rights attached to each class of share in any winding up of the company.

8) State if any body corporate is in liquidation.

9) Give details of the shareholders of all the issued shares in each subsidiary company and any intermediate company through which the relationship required under the legislation is traced. If the relationship between companies is dependent on shares held by nominees, documentary evidence of the beneficial ownership of the shares should be provided.

10) Confirm that at the date of execution of the instrument on which relief is being claimed, no arrangement was in existence by virtue of which at that (or some later) time any person had or could obtain, or any persons together had or could obtain, control of the transferee but not the transferor.

11) Say if it’s intended that (a) the relationship required by the legislation is to be maintained; and (b) the transferee body corporate will retain the beneficial ownership of the transferred property.

12) Give the amount and form (e.g. cash, shares etc.) of the consideration and say if it was satisfied from cash resources (see note 4.2(3)), through an inter-company loan account or by way of a third party loan (see note 4.2(4)).

13) Give an assurance that none of the instruments were executed in pursuance of or in connection with an arrangement described in section 27(3) Finance Act 1967. Guidance on HMRC’s practice when considering if such an arrangement exists is available in STSM042270 and STSM042300.

4.4 Supporting evidence needed for the claim

The completed and signed letter of claim should be accompanied by:

1) An electronic copy (for example, a scanned PDF) of all documents and instruments referred to in the letter.

2) To minimise file sizes, HMRC will only require a list of shareholders and the shares they hold (including class of shares) for each company, rather than copies of full registers of members (unless we specifically request them).

3) A copy of the latest accounts of the transferee company if the consideration was provided from cash resources.

4) Copies of any agreement with a third party relating to the provision of consideration.

5) Copies of correspondence, agreements, board minutes or any other writings, if the relationship between the parties or the ownership of the transferred property is not intended to continue, or there was any possibility that it might not continue.

4.5 Common Errors

Some common reasons why claims are queried or rejected include if the:

• consideration details are not completed correctly on the instrument of transfer – if the consideration given is other than cash, then full details of this should be provided so it’s clearly identified, for example:
  • 5,000 ordinary 20p shares in ABC Ltd
  • consideration as detailed in section 2.3 of the Sale and Purchase Agreement between ABC Ltd and XYZ Ltd, dated 3 March 2020
• date of the transfer is not completed on the transfer instrument
• details of the transferred shares are not provided
• evidence is not provided to confirm that the 75% beneficial ownership test is met, including where non-UK companies are included in the group
• consideration value is below £1,000 (and the transaction does not form part of a larger transaction or series of transactions where the combined consideration exceeds £1,000) – there is no requirement to claim group relief or present the transfer instrument to HMRC, instead, the certificate of value on the reverse of the stock transfer form may be completed, to self-certify that no charge to Stamp Duty arises