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HMRC internal manual

Stamp Taxes on Shares Manual

Scope of stamp duty on shares: stamp duty: adjudication, stamps and reliefs: transfer in contemplation of a sale

Under FA65/S90, a transfer that is not a conveyance on sale, but that was executed in contemplation of a sale (before a contract for the sale is made) is chargeable with duty as if it were a conveyance on sale for a consideration equal to the value of the property transferred.

The measure was introduced to counter an avoidance device which had become apparent following the decision of the House of Lords; that a transfer of shares to a company that held an outstanding option to purchase was not chargeable with duty (William Cory & Son Ltd v IRC [1965] 1 All ER 917).

A document must be adjudicated to be duly stamped under section 90. It should be noted that if, for any reason, the sale does not actually take place or the price is subsequently reduced then a repayment of the excess stamp duty may be made; but this is subject to the overriding 2 year limit placed on the repayment of Stamp Duty by the Stamp Duties Management Act 1891.

In common with all other documents for adjudication the document and all supporting exhibits should be sent to Birmingham Stamp Office together with evidence of the market value of the stocks or marketable securities transferred.