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HMRC internal manual

Stamp Taxes on Shares Manual

Scope of stamp duty on shares: stamp duty: adjudication, stamps and reliefs: the appeal procedure

The appeal procedure following a formal assessment under Section 12 Stamp Act 1891 is laid down in Sections 13 and 13A. Section 13A provides for a simpler procedure when it is only the penalty position which is in dispute.

Under the provisions of Section 13 any customer who is dissatisfied with the opinion of HMRC may require HMRC to “state a case” for the opinion of the High Court or, in Scotland, the Court of Session. It is an essential prerequisite of a request for a stated case that the customer must first have paid the full amount of duty set out in the Formal Notice of Decision on Adjudication. The applicant has 30 days from the date of issue of the Formal Notice of Decision on Adjudication to appeal and request a stated case.

Under Section 13B(3) HMRC are responsible for stating the case for the opinion of the Court. In practice the Solicitors Office of HMRC will prepare the case, setting out the Revenue’s view of the liability of the document(s) concerned in full and considering all the arguments advanced. This will be submitted in draft form to the appellant to invite any comments thereon. The draft may be amended as a result of any representations made.

When it has been finalised it is then prepared in proper legal form and sent to the Executive Committee of HMRC for signature. After signature it is passed immediately to the appellant who has 30 days to lodge it in Court for a hearing. In a Stamp Duty stated case it is unusual for witnesses to be called but evidence is sometimes produced in affidavit form. Counsel for the appellant has the right to begin the case by setting out their arguments and thereafter Counsel for HMRC sets out the Revenue’s argument.

Following any subsequent replies by Counsel the Court is required to say with what duty, if any, the document or documents are liable. In other words the Court will determine the question of the liability or otherwise of the documents and assess any duty to which they are liable. If a repayment is ordered the Court is not empowered to award interest on the sum overpaid but interest will be added to any repayment under the provisions of FA99/S110.

As mentioned above, the appellant must lodge the appeal within 30 days. There is no specific timetable for such cases to then come to a hearing but recent cases have typically taken a year before being heard.

When an appeal with payment is received in good time the document is to be stamped and returned to the customer, a photocopy of the entire stamped document is to be taken and retained on the file, and the papers are to be submitted to HMRC Solicitors Office.

An appeal outside the 30 day period specified in Section 13(2) cannot be accepted. This is a statutory time limit which cannot be extended.

The judgment of the High Court on a stamp duty appeal may be challenged within 4 weeks but the appellant must obtain leave of the High Court to appeal to the Court of Appeal. Where leave to appeal is granted the case is heard by the Court of Appeal. Finally, with the leave of the Court of Appeal, the case may be referred to the House of Lords. Cases in Scotland go direct from the Court of Session to the House of Lords.

Where duty and any penalty together with interest charged on such sum is ordered to be repaid under Section 13B(4) of the Stamp Act, interest will be added to the repayment, where appropriate, under the terms of FA99/S110.

Under the provisions of Section 13(4) an appeal against only the penalty element of a Formal Notice of Decision on Adjudication may be made to a Tribunal rather that following the process above; but Tribunals have no authority to decide on questions affecting duty. To enter this process the appeal should be made to HMRC in writing within thirty days of the issue of the Formal Notice of Decision on Adjudication. The appeal notice must specify the grounds of appeal.