HMRC has published a call for evidence on the modernisation of stamp taxes on shares (see bit.ly/3izUrFI). The call for evidence is wide-ranging and addresses fundamental aspects of the stamp tax regimes, requesting comments on issues such as a merger of stamp duty and SDRT and a move to digitisation of stamp duty processes.
The modernisation of stamp duty was recommended in a report by the Office for Tax Simplification in July 2017 entitled Stamp duty on paper documents: a way forward to reform, digitise and simplify. The government subsequently consulted on the modernisation of stamp duty and SDRT consideration rules, but this was abandoned as it was recognised this would have a more positive impact if part of a wider overhaul.
The paper recognises certain shortcomings of the current regime. Key issues include:
Whilst the stamp duty and SDRT regimes are interdependent, the rules are not aligned, with inconsistent equivalent provisions and different reliefs.
The Covid-19 lockdown necessitated a temporary move to an electronic system. This has provided additional impetus to review and revamp the stamp taxes framework.
The call for evidence is merely the first part of a consultation process, and the government does not anticipate any major legislative redesign until Finance Bill 2021/22 at the earliest.
The call for evidence focuses on six broad areas of the current stamp taxes regime. Respondents are asked about the following:
The digitalisation of stamp taxes on shares fits into a wider move to modernise the UK tax system to make it more efficient and fit for the 21st century. In particular, the system for notifying and paying SDLT has already undergone a similar overhaul.
A digital solution will likely be positively received, in particular as the changes precipitated by the pandemic have shown the benefits of a paperless system. Stakeholders will welcome the chance to provide input on the current framework, which is often viewed as outdated and slow. Additionally, practitioners will embrace the prospect of a streamlined legislative base replacing the piecemeal nature of the law as it stands.
It should be noted however that the call for evidence does not encompass consideration of the abolition of stamp duty on shares altogether. Abolition has been considered before and, indeed, legislation was actually enacted in 1990 for the abolition of stamp duty and SDRT but was never brought into effect. UK stamp taxes generally apply more widely than other European countries and there is perhaps still a good business case to be made for the removal of this tax to make the UK stock exchange more competitive.
Responses should be sent by 13 October 2020 by email to: sts.consultation@hmrc.gov.uk.
HMRC has published a call for evidence on the modernisation of stamp taxes on shares (see bit.ly/3izUrFI). The call for evidence is wide-ranging and addresses fundamental aspects of the stamp tax regimes, requesting comments on issues such as a merger of stamp duty and SDRT and a move to digitisation of stamp duty processes.
The modernisation of stamp duty was recommended in a report by the Office for Tax Simplification in July 2017 entitled Stamp duty on paper documents: a way forward to reform, digitise and simplify. The government subsequently consulted on the modernisation of stamp duty and SDRT consideration rules, but this was abandoned as it was recognised this would have a more positive impact if part of a wider overhaul.
The paper recognises certain shortcomings of the current regime. Key issues include:
Whilst the stamp duty and SDRT regimes are interdependent, the rules are not aligned, with inconsistent equivalent provisions and different reliefs.
The Covid-19 lockdown necessitated a temporary move to an electronic system. This has provided additional impetus to review and revamp the stamp taxes framework.
The call for evidence is merely the first part of a consultation process, and the government does not anticipate any major legislative redesign until Finance Bill 2021/22 at the earliest.
The call for evidence focuses on six broad areas of the current stamp taxes regime. Respondents are asked about the following:
The digitalisation of stamp taxes on shares fits into a wider move to modernise the UK tax system to make it more efficient and fit for the 21st century. In particular, the system for notifying and paying SDLT has already undergone a similar overhaul.
A digital solution will likely be positively received, in particular as the changes precipitated by the pandemic have shown the benefits of a paperless system. Stakeholders will welcome the chance to provide input on the current framework, which is often viewed as outdated and slow. Additionally, practitioners will embrace the prospect of a streamlined legislative base replacing the piecemeal nature of the law as it stands.
It should be noted however that the call for evidence does not encompass consideration of the abolition of stamp duty on shares altogether. Abolition has been considered before and, indeed, legislation was actually enacted in 1990 for the abolition of stamp duty and SDRT but was never brought into effect. UK stamp taxes generally apply more widely than other European countries and there is perhaps still a good business case to be made for the removal of this tax to make the UK stock exchange more competitive.
Responses should be sent by 13 October 2020 by email to: sts.consultation@hmrc.gov.uk.
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