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 don’t have 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.
Where units or OEIC shares are agreed to be transferred to a third party for consideration in money or money’s worth, a FA86/S87 SDRT liability can arise in the normal way that it does 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 it will need to be accounted for and paid (or paid by an accountable person on behalf of the purchaser) by giving notice to HM Revenue & Customs (HMRC) on or before the accountable date.
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 (SI 1986/1711)).
See STSM101020 for the meaning of a unit trust.
See STSM101050 for the meaning of an OEIC.