TaxPersonal Tax9 DECEMBER 1999 STAMP DUTY AND STAMP DUTY RESERVE TAX: REGULATIONS

9 DECEMBER 1999 STAMP DUTY AND STAMP DUTY RESERVE TAX: REGULATIONS

The implementation of the Finance Act 1999 regime for Stamp Duty Reserve Tax (SDRT) on dealings of units in unit trusts and shares in open-ended investment companies (oeics) has been completed, under two sets of regulations laid yesterday.

The implementation of the Finance Act 1999 regime for Stamp Duty Reserve Tax (SDRT) on dealings of units in unit trusts and shares in open-ended investment companies (oeics) has been completed, under two sets of regulations laid yesterday. One set specifies the administrative procedures under which the tax will be collected. The other set introduces SDRT provisions for oeics which correspond to those for unit trusts. The new regime comes into effect on 6 February 2000.

Regulations have also been laid to ensure that multiple charges to Stamp Duty or SDRT do not result from a development in the business conducted by one of the recognised investment exchanges. These regulations take effect from 29th December 1999.

A fourth set of regulations completes the tax regulations for the modern penalty regime for Stamp Duty which was introduced by Finance Act 1999. It provides for charging the costs of distraint action to a person who is in default of a Stamp Duty penalty, in line with other taxes.

DETAILS

1. The new regulations are:
– The Stamp Duty Reserve Tax (Amendment No. 2) Regulations 1999 (SI No. 3264);
– The Stamp Duty and Stamp Duty Reserve Tax (Open-ended Investment Companies) (Amendment No. 2) Regulations 1999 (SI. No. 3261);
– The Stamp Duty and Stamp Duty Reserve Tax (Investment Exchanges and Clearing Houses) (OM London Exchange Limited) Regulations 1999 (SI No. 3262);
– The Distraint by Collectors (Fees, Costs and Charges) (Stamp Duty Penalties) Regulations 1999 (SI No. 3263).

Copies of the regulations will be available shortly from the Stationery Office and via the Inland Revenue’s home page, the address of which is given below.

2. The Stamp Duty Reserve Tax (Amendment No. 2) Regulations provide for the administration and enforcement of the new SDRT regime from 6 February 2000. In line with the general pattern for SDRT, a monthly notice will be required on or before the `accountable date’ and the tax will be due on that date. The notice will relate to surrenders which occur within the relevant two-week periods that end during that month. For example, the notice for the first full month of the new regime, March 2000, will relate to surrenders occurring in the period from Sunday 20 February to Saturday 18 March.

3. The `accountable date’ will be the 14th day of the following month (14 April in the above example). SDRT will be due and payable on that date by the `accountable person’, who is generally the manager in the case of a unit trust and the authorised corporate director in the case of an oeic.

4. The Stamp Duty and Stamp Duty Reserve Tax (Open-ended Investment Companies) (Amendment No. 2) Regulations introduce an SDRT regime for dealings of shares in oeics which is equivalent to the new provisions for unit trusts.

5. The Stamp Duty and Stamp Duty Reserve Tax (Investment Exchanges and Clearing Houses) (OM London Exchange Limited) Regulations prevent multiple charges to Stamp Duty or SDRT when securities are transferred in relation to options being exercised, or under futures contracts. The regulations apply to transactions where OM London Exchange Limited or its clearing members are acting in a clearing capacity.

6. The Distraint by Collectors (Fees, Costs and Charges) (Stamp Duty Penalties) Regulations mirror the regulations in Statutory Instrument 1994/236 which apply to other taxes. A schedule of fees, costs and charges applies when a demand for a Stamp Duty penalty has been made by a Collector of Taxes and distraint action has been taken.

NOTES FOR EDITORS

1. A new SDRT regime for dealings in units in unit trust schemes from 6 February 2000 was introduced by section 122 and Schedule 19 of Finance Act 1999. The new regime will be more straightforward to administer and pave the way for the electronic trading of units, while maintaining a broadly consistent approach between dealings in units and dealings in shares. Schedule 19 also provides for an equivalent regime for dealings in shares of open-ended investment companies to be introduced by regulation.

2. The Stamp Duty Reserve Tax (Amendment No.2) Regulations are made under the enabling powers in section 98 Finance Act 1986 and section 121 Finance Act 1999.

3. The changes in administration which result from the introduction of the new regime have been the subject of extensive discussions between the Inland Revenue and Industry representatives. Detailed guidance on a range of administrative points was issued in September to help fund managers to plan their systems. This guidance is available on the Internet through the Inland Revenue home page.

4. The Stamp Duty and Stamp Duty Reserve Tax (Investment Exchanges and Clearing Houses) (OM London Exchange Limited) Regulations are made under sections 116 and 117 of the Finance Act 1991. Similar regulations already exist in relation to some other exchanges.

5. The Distraint by Collectors (Fees, Costs and Charges) (Stamp Duty Penalties) Regulations are made under section 61(6) of the Taxes Management Act 1970 which applies in relation to Stamp Duty penalties by virtue of the Stamp Duty (Collection and Recovery of Penalties) Regulations 1999 (SI 1999/2537).

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