Collectives: contributions, mergers and other matters: termination of a collective investment scheme
Under the terms of a Collective Investment scheme such as a unit trust or an Open-Ended Investment Company (OEIC), the trust fund or OEIC may be wound-up or terminated, with the fund’s investments distributed to each of the unit or OEIC share holders, in proportion to the value of the units/OEIC shares they hold.
In this situation, and in accordance with the terms of the arrangement for the winding-up of the fund, existing units (or OEIC shares) in circulation are cancelled by the fund manager on the appointed day and all of the investments held by the fund are distributed to the former unit/share holders.
No Stamp Duty Reserve Tax (SDRT) charge arises under FA99/SCH19 (where the termination and distribution takes place prior to 30 March 2014) or FA86/S87 on the termination or winding-up of a unit trust or OEIC in accordance with the terms of the arrangement. This is because the cancellation of units or OEIC shares is not regarded as being a ‘surrender’ for the purposes of a FA99/SCH19 charge under paragraph 2(1), or an ‘agreement to transfer’ under FA86/S87.
Similarly, the cancellation of units or OEIC shares and distribution of investments pursuant to a fund being wound up or terminated is regarded as a transfer otherwise than on sale, and a formal written instrument executed effecting the distribution is not chargeable to Stamp Duty.
See STSM101020 for the meaning of a unit trust.
See STSM101050 for the meaning of an OEIC.
See STSM103005 for information on the abolition of FA99/SCH19