Stamp Duty is payable to HMRC on share transfers where the consideration for the shares is over £1,000, at the rate of 0.5% of the consideration, rounded up to the nearest £5. Paying Stamp Duty is important because an unstamped document cannot generally be used in evidence and, in addition, share registers cannot be updated to reflect transfers until the relevant stock transfer forms have been stamped. The deadline for paying Stamp Duty and getting stock transfer documents to the Stamp Office is no later than 30 days after they've been signed and dated.
With that in mind, HMRC have designed a temporary, emergency set of measures which will allow them to continue dealing with Stamp Duty for the duration of the emergency COVID-19 period. The procedures allow taxpayers and their advisers to submit stock transfers and other instruments of transfer to HMRC by email, to be dealt with electronically rather than by applying a physical stamp.
HMRC have requested that all payments are made electronically during this time, using Faster Payment, BACS or CHAPS. Once payment has been received and the stock transfer forms have been checked, HMRC will send an email that will include a letter giving assurance that HMRC will not pursue a penalty against the company registrar for registering the new ownership of the shares.
Other points to note are as follows: -
- Any hard copy stock transfer forms posted to the Stamp Office from now on will not be processed.
- Any hard copy stock transfer forms already posted to HMRC should be re-submitted electronically including details of any payments made. If this is not done, the stock transfer forms will not be assessed or returned until these temporary COVID-19 measures end.
- The e-procedures include Form SH03 relating to the purchase by a company of its own shares. When sending this on to Companies House, a copy of the letter from HMRC confirming that the correct duty has been paid should be included. The letter will not appear on the public register.
- The stock transfer forms must still be fully completed, signed and dated. HMRC will accept e-signatures while the COVID-19 measures are in place.
- Electronic versions of any agreement and supporting documents must also be sent by email if HMRC has given a formal opinion or adjudication on how much Stamp Duty should be paid.
- Once things return to normal, the hard copy stock transfer forms can still be sent for physical stamping. Whilst this is not essential, it could make things easier in the future if a stamped stock transfer form had to be produced, given that the HMRC receipt evidencing payment will be separate from the stock transfer forms.
- HMRC Guidance on additional arrangements for stamp duty relief adjudications is expected to follow.
If you require any advice in relation to Stamp Duty or the emergency e-procedures, please get in touch with your usual Brodies contact.