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HMRC internal manual

Stamp Taxes on Shares Manual

Introduction to Stamp Duty on shares and Stamp Duty Reserve Tax (SDRT): how to pay: wait and see - provisional stamping

If documents are needed by the customer for another purpose whilst waiting for stamping on the “wait and see” basis, an application may be made for it to be stamped on a provisional basis. To do this HM Revenue & Customs (HMRC) must:

•have agreed that the “wait and see” basis is appropriate

•have received a sum representing a reasonable estimate of the duty which will eventually be payable

•have a written undertaking that when the consideration is determined the documents will be returned without undue delay, and that any additional duty payable will be paid at that time.

In this respect, there are two alternatives from whom HMRC will accept a written undertaking and that undertaking must be included in the original application. They are:

  1. Prior to release of the provisionally stamped documents, a written undertaking is sent to HMRC from an agent acting on behalf of the purchasing client (where the purchasing client wants to rely on his agent to give the undertaking).

In this situation, the application and undertaking from the agent must additionally include a separate written declaration or undertaking from the purchasing client to the effect that should the original agent no longer act for the purchasing client when the final consideration amount is determined, the purchasing client will assume responsibility for resubmitting the documents without delay and pay any additional stamp duty and interest due to HMRC.

The declaration/undertaking must be from a responsible officer of the purchasing corporate entity that is seeking to rely on the provisionally stamped documents.

OR

  1. Where an agent submits an application for provisional stamping on behalf of their purchasing client, the application includes an undertaking from the purchasing client.

The undertaking must be from a responsible officer of the corporate entity purchaser that is seeking to rely on the provisionally stamped documents.

It must include an undertaking to resubmit the documents to HMRC and pay any additional stamp duty and any interest due when the total consideration amount is determined.

If no such undertaking is received in the above examples, HMRC will not be in a position to agree to provisionally stamp a document.

When returning the documents stamped on a provisional basis HMRC will, if not already done, advise the reference to use when resubmitting them to HMRC.

It is important that the undertaking is strictly adhered to as the stamping process is not complete until the documents are returned to HMRC, even if the estimate and the outcome do not cause the duty payable to vary. In particular, if adjudication has been requested under the provisions of S12 SA1891, the adjudication stamp will not be impressed when documents are stamped on a provisional basis as to do so would indicate that the adjudication process is complete.

The interest position is exactly the same as under “wait and see”. Interest is due on additional duty payable and will be added to repayments of duty overpaid.

HMRC would usually expect completion accounts to be agreed within three months of finalisation but does accept that the process may occasionally take longer. To avoid unnecessary reminders being sent HMRC should be informed if there is likely to be any undue delay in accounts being agreed.