Stamp Duty and Stamp Duty Reserve Tax: Intermediary and Stock Lending Reliefs – FA 2007
Published 11 December 2014
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1. Intermediary and Stock Lending Reliefs – FA 2007
Transaction reporting to a Multilateral Trading Facility, Recognised Foreign Exchange or Recognised Foreign Options Exchange.
HM Revenue and Customs (HMRC) has been asked to clarify the operation of the stamp duty and stamp duty reserve tax rules for intermediary and stock lending relief, as amended with effect from 1 November 2007, in respect of transactions involving stocks other than those that are regularly traded on a regulated market.
The intermediary relief legislation covering stocks regularly traded on a multilateral trading facility (MTF), recognised foreign exchange (RFE) or recognised foreign options exchange (RFOE) provides that relief is only available where the transaction is subject to the rules of the particular MTF/exchange and is reported to the MTF/exchange in accordance with those rules (see sections 80A(6) and 88A(6) FA 1986). The stock lending relief provisions contain a similar requirement (see sections 80C(6) and 89AA(5) FA 1986).
HMRC understands that the rules of some MTFs/exchanges may, following the implementation of the Directive on Markets in Financial Instruments (MiFID), no longer contain a requirement to report a transaction to the MTF/exchange. This means that members of those organisations are strictly unable to fulfil the requirement in the legislation that transactions must be reported to the MTF/exchange.
HMRC recognises that a strict reading of the legislation would result in intermediary or stock lending relief not being granted. It therefore intends to amend the legislation to address this at the earliest opportunity. In the meantime, HMRC won’t refuse relief where the rules of an MTF/exchange are either silent about the need to report transactions or specifically state that a report isn’t required. Nor will stock lending relief be denied if the stock loan is reported to CREST for settlement and the Trade System of Origin (TSO) field completed in accordance with the rules of the market/MTF/exchange.
For trading transactions on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE), the trade report that AIM members are required to make to the LSE will be regarded as satisfying the reporting condition for the purposes of section 80A(6) and 88A(6).