On 21 July 2020 the UK issued a call for evidence inviting the views of interested parties on the design of a new framework for stamp taxes on shares (STS). Comments are invited by 13 October 2020.

The STS framework covers the legislation, guidance and administrative processes for administration of stamp duty and Stamp Duty Reserve Tax (SDRT). The framework defines the obligations of taxpayers and HMRC on issues such as notification of an obligation to pay tax; calculation of the tax liability; collection of the tax; penalties and interest; and the management of disputes.

Stamp duty is a charge on the instruments that transfer the beneficial interest in stock or marketable securities and is also charged on instruments that transfer interests in land if the transfer took place prior to 1 December 2003 or the agreement was entered into on or before 10 July 2003. Stamp duty is charged on the stock transfer form or on any other instrument that transfers the beneficial interest in stock or marketable securities.

SDRT was introduced on agreements to transfer uncertificated (paperless) shares and other securities and now applies to most transfers of shares and securities. SDRT is charged on agreements to transfer chargeable securities.

The government is planning a modernisation of the regimes and is therefore asking for views on the principles and design of a new framework, and the prioritisation of elements within the overall modernisation programme.

As stamp duty is a paper-based regime it is seen as an outdated part of the tax system. It can cause uncertainty for investors; does not fit into policy objective of raising revenue while minimising the compliance burden; and reduces flexibility in tax policy. Much of the stamp duty collected relates to large corporate takeovers and the process of dealing with the stock transfer forms can cause unwelcome delays for the taxpayers. The Office for Tax Simplification (OTS) has produced a paper recommending that the process of tax collection should be made digital and simplified.

Stamp duty can also deter investment because the legislation is outdated and not consolidated into one piece of legislation; some common terms in modern business transactions are not covered in the legislation; some stamp duty definitions are inconsistent with definitions for SDRT purposes; and some reliefs from stamp duty do not apply to SDRT.

HMRC is asking for information from interested parties on their experience with tax on securities in foreign countries and methods of tax collection that they consider to be more efficient. Information is required on the aspects of the system most in need of amendment and changes that should be given priority.

HMRC want to know if there should be more self-assessment in the stamp duty regime. Views are invited on other necessary improvements required in addition to digitalisation of the stamp duty regime. Also views are requested on whether it is now outdated to tie stamp duty to the registration of title of shares.