STSM042430 - Exemptions and Reliefs: reliefs: suggested S77 claim letter

Suggested section 77 Finance Act 1986 claim letter

The draft letter below can be used when relief is claimed under section 77 FA1986. Practical details on how to submit a relief claim are available on gov.uk.

Dear Sirs

……………………………………………………………………………….. Limited/plc

Section 77 Finance Act 1986

1. We act for …………………………………………………………… Limited/plc (‘the Acquiring Company’).

2. In connection with the transactions referred to below we hereby apply on behalf of the Acquiring Company for exemption from transfer duty under Section 77 Finance Act 1986.

3. The Acquiring Company, whose registered office is at …………………………………………………………………..….,

was incorporated in [England] on …………….……… 20 ……. [under the Companies Act[s] 20 ……. [to 20 …….] with No ….……….….….]. Immediately prior to ….….…………….. 20 ……. the authorised share capital of the Acquiring Company was £ ………………. divided into […………….… per cent ……….…………. Preference Shares of ………… each and] …..……… Ordinary Shares of ………….. each, of which [………………..…… such Preference Shares and] ……………….. such Ordinary Shares had been issued and were fully paid up] [delete if not applicable]. A copy of the Certificate of Incorporation [and the Certificate of Incorporation on Change of Name] [is/are] enclosed marked ‘A’.

4. …………………………………..……………………………………………………….. Limited/plc (‘the Target Company’), whose registered office is at ………………………………………………………………………………, was incorporated in [England] on ……………………………………….. 20 ……. [under the Companies Act[s] 20 ……. [to 20 …….] with No ……………………]. Immediately prior to ………….…….. 20 ……. the authorised share capital of the Target Company was £ ………………… divided into […………….… per cent ……….…………. Preference Shares of ………… each and] …..……… Ordinary Shares of ………….. each, of which [………………..…… such Preference Shares and] …………………. such Ordinary Shares had been issued and were fully paid up] [delete if not applicable]. A copy of the Certificate of Incorporation [and the Certificate of Incorporation on Change of Name] [is/are] enclosed marked ‘B’. The register of members, or a list of all members, of the Target Company immediately prior to ……………………………..………. 20 ……., certified by the Registrars of the Target Company, is enclosed marked ‘C’.

NOTE – certification must be provided by a named, identifiable individual who is legally accountable for the maintenance of the register (e.g. the Registrar/Company Secretary ).]

5. The transactions referred to below were carried out in order that … [set out briefly the reasons for the transactions]. [Note: if advance clearance was not obtained (see paragraph 12) then please give a detailed explanation of the bona fide commercial reasons for the transaction.]

6. By an Agreement dated …………….………… 20 ……. and made between …………………………..………………….. and …………..………………………… (the ‘Shareholder[s]’) (i) the Target Company (ii) and the Acquiring Company (iii) (‘the Agreement’), it was provided (inter alia) that the Shareholder[s] should sell and the Acquiring Company should purchase the [respective] number[s] of [……….. per cent ………. Preference Shares of ……………… each and] ………..……… Ordinary Shares of ……………..… each of the Target Company set out in [Clause ……………… of/columns[s] (…………..) [and (…………..) respectively] of Schedule ……………. to the Agreement (such Shares amounting in the aggregate to the whole of the issued share capital of the Target Company) and that as consideration for such sale the Acquiring Company should issue credited as fully paid to the Shareholders (being all the shareholders of the Target Company) [………………/the [respective] number[s] of] [……….. per cent ………. Preference Shares of ……………… each and] ………..……… Ordinary Shares of ………………….. each of the Acquiring Company set out in [Clause …………… of/column (………………) of] such Schedule] (‘the Consideration Shares’). A copy of the Agreement is enclosed marked ‘D’.

7. The said sale was duly completed on ……………………….. 20 ……. when the Shareholders delivered to and in favour of the Acquiring Company duly executed transfers of the whole of the issued Shares of the Target Company. Immediately following such delivery one Ordinary Share of ………………………………… of …………………………… was transferred to …………………………….. [jointly] as nominee[s] of the Acquiring Company in order that there could be the necessary minimum number of Members of the Target Company and a quorum of Members could be present at General Meetings of the Target Company. There was also delivered to the Acquiring Company the relevant Share Certificates.

8. At a Meeting of [a Committee of] the Directors of the Acquiring Company held on ………….. 20 ……. the Consideration Shares (which had been created by Resolution No ……………… passed at the Extraordinary General Meeting held on …………………….. 20 …….) were duly issued to the Shareholders pursuant to the provisions of the Agreement. We enclose marked [‘E’] [and [‘F’] respectively] [a] certified [copy/copies] of the Resolution of the Directors of the Acquiring Company passed on ………………….……….. 20 ……. [appointing the said Committee and of the Resolution of the said Committee of the Directors] making such issue. We also enclose marked [‘G’] a certificate under the hand of Mr …………………, [the senior official of the Registration Department of …………………………………………………….. Limited/plc, the Registrars] [the Company Secretary] of the Acquiring Company, confirming that the names of the respective allottees of the Consideration Shares have been entered in the Register of [Members of] the Acquiring Company in respect of the Consideration Shares together with a copy of the register of members, or a list of all members, of the Acquiring Company immediately following the issue, certified by [the Registrars] [the Company Secretary] of the Acquiring Company, marked ‘H’.

[NOTE – A print-out from a computerised register, which need not be certified, is acceptable (if available) instead of the register or list of members.]

9. Immediately after the acquisition the authorised share capital of the Acquiring Company was £ ………………… divided into [……………. per cent ……………. Preference Shares of …………………. each and] ……………….. Ordinary Shares of …………………… each, of which [………………. such Preference Shares and] ………………… such Ordinary Shares had been issued and were fully paid up.

10. It is confirmed that immediately after the acquisition the classes of shares in the Acquiring Company were in the same proportions as they had been in the Target Company immediately before the acquisition was made.

11. It is confirmed that immediately after the acquisition the proportion of shares of any particular class in the Acquiring Company held by each shareholder was the same as the proportion of shares of that class in the Target Company held by him immediately before the acquisition was made.

12. [An] [No] application(s) for clearance under [Section 138 or 139 TCGA 1992] [Section 707 ICTA 1988] [has/have] been made by the [Acquiring] [Target] Company. A copy of the application(s) [together with copies of correspondence with the HMRC Clearance and Counteraction Team] [are/is] enclosed marked [‘I’].

[Note: if advance clearance was not obtained then please provide the information detailed below.]

13. It is submitted that the acquisition was effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to stamp duty, stamp duty reserve tax, income tax, corporation tax or capital gains tax and the appropriate conditions of Section 77 Finance Act 1986 have been complied with, and accordingly exemption from ad valorem stamp duty under the head ‘Conveyance or Transfer on Sale’ is claimed in respect of the agreement and the transfers executed pursuant thereto.

14. I/We confirm that at the time of execution of the acquisition of the target company’s share capital there are no further related or subsequent transactions which together may be regarded as disqualifying arrangements under section 77A Finance Act 1986.

15. We enclose for adjudication [describe document] together with [a] certified [copy/copies].

Yours faithfully

Information to be supplied if advance clearance was not obtained (see paragraphs 5 and 12 above):

1. a copy of the latest accounts of the Target Company;

2. full details of any scheme or arrangement of which the acquisition of the Target Company forms a part;

3. confirmation, if appropriate, that the shares in the Target Company are still held by the Acquiring Company and that there is no intention to dispose of them; and

4. a detailed note of the bona fide commercial reasons for the acquisition.