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HMRC internal manual

Stamp Taxes on Shares Manual

CREST: introduction: example - progress of a trade through CREST

  1. Investor A agrees to sell to Investor B 10,000 ABC plc shares for a consideration of £50,000. The transaction is agreed in SETS (the London Stock Exchange’s computer trading system) or over the telephone. Both A and B are CREST participants. The shares are shown in the ABC plc register as held by A and are recorded in A’s CREST stock account. The date of the agreement is known as the ‘trade date’ (T).
  2. Details of the agreed transaction are sent to CREST separately by each participant. This information will include the consideration to be used for Stamp Duty Reserve Tax (SDRT) purposes and any relevant Transaction Status Stamp (TSS) flags (see STSM133050), and enables CREST to identify from whom any SDRT should be deducted.
  3. CREST checks the inputs from each participant against each other and, if the details match, creates a ‘matched bargain’. CREST notes, in particular, the settlement date agreed by the parties.
  4. On settlement day
* CREST checks that A has sufficient stock in its CREST stock account and that B has enough credit in its cash memorandum account (CMA).
* The stock is moved from A’s stock account to B’s stock account, the guaranteed payment obligations are recorded in the CMAs and CREST sends a ‘register update request’ (RUR) to the company registrar who amends the register within two hours.
* CREST sends instructions to the banks to make payment and, at the end of the business day, all the banks settle with each other outside CREST.
* Unless an exemption from SDRT applies, CREST deducts SDRT of £250 (0.5% of £50,000) on settlement day, or 10 days after the trade date (T+10) whichever is the earlier - as provided for in the CREST Reference Manual.
  1. CREST will account to HMRC for the SDRT it has deducted in accordance with the arrangements set up for the purpose. At the end of each day, CREST sends to SDRT Operations a datafeed with full details of all the transactions for that day.
  2. SDRT Operations use the datafeed information:
* to verify that CREST has collected the correct amount of SDRT,
* to check, in cases where repayment is claimed, that SDRT was paid and has not been repaid,
* to provide support information to the SDRT Compliance Team.