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HMRC internal manual

Stamp Taxes on Shares Manual

HM Revenue & Customs
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Scope of stamp duty on shares: stamp duty: adjudication, stamps and reliefs: acquisition of target company’s share capital

Relief under FA86/S77 is available where the whole of the issued share capital of a company is acquired in a single transaction and the acquiring company has the same share and shareholder structure after the transaction as the target company did before the transaction. The most common example is when a new holding company is placed above an existing company, or at the head of a group of companies.

The conditions

  • the transfer forms part of an arrangement to acquire the whole of the issued share capital of the target company
  • the acquisition is 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 the avoidance of stamp duty, stamp duty reserve tax, income tax, corporation tax or capital gains tax
  • the consideration for the acquisition consists only of the issue of shares in the acquiring company to the shareholders of the target company
  • after the acquisition each shareholder of the target company is a shareholder of the acquiring company and that the proportion of shares, and the shares of any particular class, held by each shareholder of the acquiring company is the same as was held by that shareholder in the target company before the transaction
  • after the acquisition the shares in the acquiring company are the same classes that were in the target company immediately before the transaction and that the proportionate relationship which those classes have to each other is the same in both the target immediately before and the acquiring company immediately after the transaction

If a company holds any of its own shares these are treated as having been cancelled before the transaction, so that, for the purposes of the tests, the company is not regarded as being a shareholder of itself.

The effect of these conditions is that there is a requirement for a “mirror image” in terms of proportions between the share and shareholder structure of both the target company immediately before, and the acquiring company immediately after, the transaction. There will be cases when achieving complete equality is impossible, e.g. because to do so would require the existence of fractional shares. In those circumstances the legislation does permit the relief to still be available; but each such case will be considered on its’ individual merits.

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. Further information on the content and required exhibits can be found at