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HMRC internal manual

Stamp Taxes on Shares Manual

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HM Revenue & Customs
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Depositary receipt and clearance services: scope of 1.5 per cent charge: Stamp Duty Reserve Tax - issue of a nil paid allotment letter or renounceable letter of allotment

Following the decisions by the European Court of Justice in October 2009 in the case of HSBC Holdings PLC and Vidacos Nominees Ltd v Commissioners for HM Revenue & Customs(C569/07), and the First-Tier Tribunal (Tax Chamber) in March 2012 in the case of HSBC Holdings PLC and the Bank of New York Mellon Corporation v Commissioners for HM Revenue & Customs (TC/2009/16584), HM Revenue & Customs (HMRC) accepts that the charging of 1.5 per cent on securities issued by a United Kingdom incorporated company to a depositary receipt issuer or to a clearance service located anywhere in the world, is incompatible with European Union law.

In these circumstances, HMRC do not seek to collect 1.5 per cent on the issue of a nil paid allotment letter or renounceable letter of allotment issued to a depositary receipt issuer or operator of a clearance service.

Similarly, no 1.5 per cent SDRT charge arises where a nil paid allotment letter or renounceable letter of allotment is held by a depositary receipt issuer or clearance service and, at the end of the renunciation period, the holder subscribes in cash for the issue of new shares for simultaneous depositing with a depositary receipt issuer or clearance service.

For the meaning of ‘chargeable securities’, see STSM053030.

See STSM055030 for the meaning of an allotment letter and a renounceable letter of allotment.