Schemes of arrangement and stamp duty: change in HMRC practice
HM Revenue & Customs has issued new guidance, changing its view and practice regarding how stamp duty is paid on transfer schemes of arrangement.
In March of this year the Companies Act was amended to ban takeovers from being effected by cancellation scheme. The ban was introduced in order to prevent cancellation schemes being used to avoid the payment of stamp duty on takeovers. Companies effecting takeovers now have to use a transfer scheme (or a contractual offer) on which stamp duty is payable.
HMRC practice since March has been to stamp the court order approving the scheme, which has delayed the date on which such schemes become effective. In response to representation from Linklaters and other law firms, HMRC has now accepted that it is the stock transfer form and not the court order which needs to be stamped when the scheme provides for a separate stock transfer form (which is normal practice).
This means that it will be possible to make the scheme effective shortly after the court sanction hearing or scheme record date (if later), rather than having to wait for stamping by HMRC.
HMRC will issue a letter to confirm this.