STSM042330 - Exemptions and reliefs: reliefs: circumstances in which intra-group transfer will not cancel an SDRT charge

Ordinarily, the execution and stamping (if required) of an instrument ‘adjudged not chargeable with any duty’, including due to group relief under section 42 FA1930, cancels the Stamp Duty Reserve Tax (SDRT) charge on the underlying agreement to transfer the securities (see STSM042210). However, section 88(1B), (4), (5) and (6) FA1986 place limits on the circumstances where SDRT will be cancelled.

Section 88(1B) FA1986 acts to prevent recognised intermediaries from being used to buy shares for other group members free from Stamp Duty and SDRT.

It provides that:

• an instrument on which Stamp Duty is not chargeable by virtue of section 42 FA1930 (group relief) is to be disregarded for the purposes of section 92(1A) and (1B) FA1986 (cancellation of SDRT) where;
• the transferor acquired the securities without paying Stamp Duty or SDRT due to intermediary relief under section 80A or 88A FA1986 (or under regulations made under sections 116 – 117 FA1991); and
• those securities were acquired within a period of two years before the instrument upon which group relief is being claimed was executed.

So, where intermediary relief is claimed when securities are initially acquired, if within two years those same securities are transferred to another group member and Stamp Duty group relief successfully claimed, this will not cancel the SDRT on the intra-group transfer.

This prevents a recognised intermediary passing on the benefit of intermediary relief to other group members, by leaving the SDRT charge on the intra-group transfer in place in certain circumstances.