Stamp Duty ‘clearing’ relief update
HMRC have issued a clarification on the eligibility of certain transactions for ‘clearing’ relief from Stamp Duty and Stamp Duty Reserve Tax (SDRT). This follows a number of requests by interested parties as to whether securities transactions that are reported and cleared via an investment exchange or a multilateral trading facility, are eligible for the relief under existing Investment Exchange and Clearing House regulations.
A ‘clearing’ house is effectively an entity that sits between the final seller and buyer of securities. However, the ‘clearing’ house does, in itself, create transfers effectively of a single purchase and sale of securities which are relieved from Stamp Duty and SDRT by relevant regulations under section 116 and 117 of Finance Act 1991.
The clarification issued by HMRC helps define the meaning of the word ‘made’as used in the regulations to describe the actions of a ‘clearing house i.e. ‘inconnection with a transaction made on the facility [or exchange]‘.
HMRC’s view is that the word ‘made’ includes all transactions that are performed on an investment exchange or multilateral trading facility in accordance with the rules of that exchange or facility. This means that transactions ‘made’ on a platform will include transactions conducted away from the central trading mechanism but executed in accordance with the rules of the trading platform.