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HMRC internal manual

Stamp Taxes on Shares Manual

Bearer instruments: bearer instrument duty: variation of the terms of conditions of a bearer instrument

Under the provisions of FA99/SCH15/PARA20, if a bearer instrument issued by or on behalf of a non-United Kingdom (UK) company in respect of a loan expressed in UK sterling currency:

  • is stamped with ad valorem stamp duty **; or
  • is stamped with the bearer instrument denoting stamp by virtue of Section 99 and Schedule 32 of Part 5 of Finance Act 2008 (which amends Paragraphs 6 and 20(b) of Schedule 15 Finance Act 1999 for instruments dated on after 13 March 2008) to indicate this is a substitute for an original instrument that has been stamped and impressed with ad valorem stamp duty; or
  • is stamped and impressed with the bearer instrument denoting stamp by virtue of FA99/SCH15/PARA21 (2)(b) ;

There are no further stamp duty implications as a result of the amendment of any of the original terms or conditions of the bearer instrument.

**Following the decisions by the European Court of Justice (ECJ) 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] (FTT) 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 where shares in a UK incorporated company are issued, the imposition of a 1.5 per cent Stamp Duty Reserve Tax (SDRT) charge is incompatible with European Union law.

HMRC accepts that the ECJ and FTT decisions must equally be interpreted as also applying to the prohibition of charging ad valorem stamp duty such as that imposed by FA99/SCH15/PARA1.

In these circumstances and until such time as the provisions of Schedule 15 are amended, HMRC will not seek to collect 1.5 per cent stamp duty on the issue of a bearer instrument under FA99/SCH15/PARA1.