Collectives: Third party matters: Third Party units/OEIC shares transferred without notification to a fund manager
Certain transfers of United Kingdom (UK) registered units in a unit trust or shares in an Open-Ended Investment Company (OEIC) may not require or involve a change of legal title, and consequently not required to be notified to a fund manager.
This includes units or OEIC shares held in the name of a holder as nominee for the underlying owner which are transferred to a third party for consideration or otherwise, but the units/OEIC shares remain in the legal name of the same nominee. As the fund manager is not instructed to change the unit or OEIC share register, there is no charge to Stamp Duty Reserve Tax (SDRT) under FA99/SCH19.
Where units or OEIC shares are agreed to be transferred to a third party for consideration in money or money’s worth, a charge to SDRT can, nevertheless, arise under FA86/S87 in the normal way that the charge applies when UK registered stocks and shares are purchased. This is because units and OEIC shares are regarded as ‘chargeable securities’ for SDRT purposes (FA86/S99(3)(d)).
In this situation, subject to any exemption from stamp duty and SDRT under FA86/S90(1A) , the purchaser is liable for SDRT and the tax will need to be accounted for and paid (or by an accountable person on behalf of the purchaser) by giving notice to HM Revenue & Customs on or before the accountable date. In this respect, the accountable date will be the seventh day following the month in which the charge arose (Regulation 2, Stamp Duty & Stamp Duty Reserve Tax Regulations 1986).
See STSM101020 for the meaning of a unit trust.
See STSM101050 for the meaning of an open-ended investment company.