Scope of stamp duty on shares: stamp duty: adjudication, stamps and reliefs: Intra-Group Relief
FA30/S42 provides relief for transfers of stock or marketable securities on sale between any companies which are members of the same group (‘associated companies’). Companies are ‘associated’ when one holds at least 75 per cent of the issued ordinary share capital of the other or a third company holds at least 75 per cent of the issued ordinary share of each of the companies. Where ownership can be traced through partnerships that are recognised as being transparent for tax purposes they will also be regarded as transparent for the purpose of Group Relief in Stamp Duty.
The conditions for relief
- The transfer is between bodies corporate
- Those bodies corporate must be ‘associated’ as defined above
- No part of the consideration is to have been provided or received, directly or indirectly, by an outsider not associated with the transferor or transferee (but this does not extend to normal commercial finance arrangements)
- The beneficial interest must not have been previously transferred by an outsider not associated with transferor or transferee company (an anti-avoidance provision to prevent the manipulation of sub-sale relief)
- There must be no arrangement whereby the transferor and transferee are to cease to be associated because the transferor, or another body corporate, is to cease to be the transferee’s parent (but if the transferor is to leave the group with the asset remaining within the group the relief will still be available)
How to claim the relief
The documents for stamping, certified copies of each of the documents and a letter of claim should be sent to Birmingham Stamp Office. The letter of claim must be signed by a responsible officer of the parent company who is able to give an unqualified statement from first-hand information. Further information on the format of the letter together with details of required exhibits can be found at http://www.hmrc.gov.uk/so/forms/s42.pdf.