Finance Act 1986

PART IIIU.K.STAMP DUTY

SecuritiesU.K.

F164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66Company's purchase of own sharesU.K.

(1)This section applies where a company purchases its own shares under section 162 of the Companies Act 1985 M1 or Article 47 of the Companies (Northern Ireland) Order 1982 M2.

(2)The return which relates to the shares purchased and is delivered to the registrar of companies under section 169 of that Act or, as the case may be, Article 53 of that Order shall be charged with stamp duty, and treated for all purposes of the Stamp Act 1891 M3, as if it were an instrument transferring the shares on sale to the company in pursuance of the contract (or contracts) of purchase concerned.

(3)Subject to subsection (4) below, this section applies to any return under section 169 of the Companies Act 1985, or Article 53 of the Companies (Northern Ireland) Order 1982, which is delivered to the registrar of companies on or after the day of The Stock Exchange reforms.

(4)This section does not apply to any return to the extent that the shares to which it relates were purchased under a contract entered into before the day of The Stock Exchange reforms.

(5)In this section “the day of The Stock Exchange reforms” means the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

Depositary receiptsU.K.

67Depositary receiptsU.K.

(1)Subject to subsection (9) below, subsection (2) or (3) below (as the case may be) applies where an instrument transfers relevant securities of a company incorporated in the United Kingdom to a person who at the time of the transfer falls within subsection (6), (7) or (8) below.

[F3(2)If stamp duty is chargeable on the instrument under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale), the rate at which that duty is chargeable is 1.5% of the amount or value of the consideration for the sale to which the instrument gives effect.

(3)If stamp duty is chargeable on the instrument under paragraph 16 of Schedule 13 to the Finance Act 1999 (conveyance or transfer otherwise than on sale), then, subject to subsection (5), the rate at which that duty is chargeable is 1.5% of the value of the securities at the date the instrument is executed.]

(4)F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)In a case where —

(a)securities are issued, or securities sold are transferred, and (in either case) they are to be paid for in instalments,

(b)the person to whom they are issued or transferred holds them and transfers them to another person when the last instalment is paid,

(c)the transfer to the other person is effected by an instrument in the case of which subsection (3) above applies,

(d)before the execution of the instrument mentioned in paragraph (c) above an instrument is received by a person falling (at the time of the receipt) within subsection (6), (7) or (8) below,

(e)the instrument so received evidences all the rights which (by virtue of the terms under which the securities are issued or sold as mentioned in paragraph (a) above) subsist in respect of them at the time of the receipt, and

(f)the instrument mentioned in paragraph (c) above contains a statement that paragraphs (a), (b) and (e) above are fulfilled,

subsection (3) above shall have effect as if the reference to the value there mentioned were to an amount (if any) equal to the total of the instalments payable, less those paid before the transfer to the other person is effected.

(6)A person falls within this subsection if his business is exclusively that of holding relevant securities —

(a)as nominee or agent for a person whose business is or includes issuing depositary receipts for relevant securities, and

(b)for the purposes of such part of the business mentioned in paragraph (a) above as consists of issuing such depositary receipts (in a case where the business does not consist exclusively of that).

(7)A person falls within this subsection if —

(a)he is specified for the purposes of this subsection by the Treasury by order made by statutory instrument, and

(b)his business is or includes issuing depositary receipts for relevant securities.

(8)A person falls within this subsection if —

(a)he is specified for the purposes of this subsection by the Treasury by order made by statutory instrument,

(b)he does not fall within subsection (6) above but his business includes holding relevant securities as nominee or agent for a person who falls within subsection (7)(b) above at the time of the transfer, and

(c)he holds relevant securities as nominee or agent for such a person, for the purposes of such part of that person's business as consists of issuing depositary receipts for relevant securities (in a case where that business does not consist exclusively of that).

(9)Where an instrument transfers relevant securities of a company incorporated in the United Kingdom —

(a)to a company which at the time of the transfer falls within subsection (6) above F5. . . , and

(b)from a company which at that time falls within that subsection F5. . . ,

subsections (2) to (5) above shall not apply and the [F6stamp duty chargeable on the instrument is £5].

(10)This section applies to any instrument executed on or after the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

68Depositary receipts: notificationU.K.

(1)A person whose business is or includes issuing depositary receipts for relevant securities of a company incorporated in the United Kingdom shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which he first issues such depositary receipts.

(2)A person whose business includes (but does not exclusively consist of) holding relevant securities (being securities of a company incorporated in the United Kingdom)—

(a)as nominee or agent for a person whose business is or includes issuing depositary receipts for relevant securities, and

(b)for the purposes of such part of the business mentioned in paragraph (a) above as consists of issuing such depositary receipts (in a case where the business does not consist exclusively of that),

shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which he first holds such relevant securities as such a nominee or agent and for such purposes.

(3)A company which is incorporated in the United Kingdom and becomes aware that any shares in the company are held by a person such as is mentioned in subsection (1) or (2) above shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which the company first becomes aware of that fact.

(4)A person who fails to comply with subsection (1) or (2) above shall be liable to a [F7penalty] not exceeding £1,000.

(5)A company which fails to comply with subsection (3) above shall be liable to a [F7penalty] not exceeding £100.

(6)F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

69Depositary receipts: supplementaryU.K.

(1)For the purposes of sections 67 and 68 above a depositary receipt for relevant securities is an instrument acknowledging—

(a)that a person holds relevant securities or evidence of the right to receive them, and

(b)that another person is entitled to rights, whether expressed as units or otherwise, in or in relation to relevant securities of the same kind, including the right to receive such securities (or evidence of the right to receive them) from the person mentioned in paragraph (a) above,

except that for those purposes a depositary receipt for relevant securities does not include an instrument acknowledging rights in or in relation to securities if they are issued or sold under terms providing for payment in instalments and for the issue of the instrument as evidence that an instalment has been paid.

(2)The Treasury may by regulations provide that for subsection (1) above (as it has effect for the time being) there shall be substituted a subsection containing a different definition of a depositary receipt for the purposes of sections 67 and 68 above.

(3)References in this section and sections 67 and 68 above to relevant securities, or to relevant securities of a company, are to shares in or stock or marketable securities of any company (which, unless otherwise stated, need not be incorporated in the United Kingdom).

(4)For the purposes of section 67(3) above the value of securities at the date the instrument is executed shall be taken to be the price they might reasonably be expected to fetch on a sale at that time in the open market.

(5)F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)The power to make regulations or an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

Clearance servicesU.K.

70Clearance servicesU.K.

(1)Subject to subsection (9) [F11and section 97A] below, subsection (2) or (3) below (as the case may be) applies where an instrument transfers relevant securities of a company incorporated in the United Kingdom to a person who at the time of the transfer falls within subsection (6), (7) or (8) below.

[F12(2)If stamp duty is chargeable on the instrument under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale), the rate at which that duty is chargeable is 1.5% of the amount or value of the consideration for the sale to which the instrument gives effect.

(3)If stamp duty is chargeable on the instrument under paragraph 16 of Schedule 13 to the Finance Act 1999 (conveyance or transfer otherwise than on sale), then, subject to subsection (5), the rate at which that duty is chargeable is 1.5% of the value of the securities at the date the instrument is executed.]

(4)F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)In a case where —

(a)securities are issued, or securities sold are transferred, and (in either case) they are to be paid for in instalments,

(b)the person to whom they are issued or transferred holds them and transfers them to another person when the last instalment is paid,

(c)the transfer to the other person is effected by an instrument in the case of which subsection (3) above applies,

(d)before the execution of the instrument mentioned in paragraph (c) above an instrument is received by a person falling (at the time of the receipt) within subsection (6), (7) or (8) below,

(e)the instrument so received evidences all the rights which (by virtue of the terms under which the securities are issued or sold as mentioned in paragraph (a) above) subsist in respect of them at the time of the receipt, and

(f)the instrument mentioned in paragraph (c) above contains a statement that paragraphs (a), (b) and (e) above are fulfilled,

subsection (3) above shall have effect as if the reference to the value there mentioned were to an amount (if any) equal to the total of the instalments payable, less those paid before the transfer to the other person is effected.

(6)A person falls within this subsection if his business is exclusively that of holding relevant securities —

(a)as nominee or agent for a person whose business is or includes the provision of clearance services for the purchase and sale of relevant securities, and

(b)for the purposes of such part of the business mentioned in paragraph (a) above as consists of the provision of such clearance services (in a case where the business does not consist exclusively of that).

(7)A person falls within this subsection if —

(a)he is specified for the purposes of this subsection by the Treasury by order made by statutory instrument, and

(b)his business is or includes the provision of clearance services for the purchase and sale of relevant securities.

(8)A person falls within this subsection if —

(a)he is specified for the purposes of this subsection by the Treasury by order made by statutory instrument,

(b)he does not fall within subsection (6) above but his business includes holding relevant securities as nominee or agent for a person who falls within subsection (7)(b) above at the time of the transfer, and

(c)he holds relevant securities as nominee or agent for such a person, for the purposes of such part of that person's business as consists of the provision of clearance services for the purchase and sale of relevant securities (in a case where that business does not consist exclusively of that).

(9)Where an instrument transfers relevant securities of a company incorporated in the United Kingdom —

(a)to a company which at the time of the transfer falls within subsection (6) above F14. . . , and

(b)from a company which at that time falls within that subsection F14. . . ,

subsections (2) to (5) above shall not apply and the [F15stamp duty chargeable on the instrument is £5].

(10)This section applies to any instrument executed on or after the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

71Clearance services: notificationU.K.

(1)A person whose business is or includes the provision of clearance services for the purchase and sale of relevant securities of a company incorporated in the United Kingdom shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which he first provides such clearance services.

(2)A person whose business includes (but does not exclusively consist of) holding relevant securities (being securities of a company incorporated in the United Kingdom)—

(a)as nominee or agent for a person whose business is or includes the provision of clearance services for the purchase and sale of relevant securities, and

(b)for the purposes of such part of the business mentioned in paragraph (a) above as consists of the provision of such clearance services (in a case where the business does not consist exclusively of that),

shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which he first holds such relevant securities as such a nominee or agent and for such purposes.

(3)A company which is incorporated in the United Kingdom and becomes aware that any shares in the company are held by a person such as is mentioned in subsection (1) or (2) above shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which the company first becomes aware of that fact.

(4)A person who fails to comply with subsection (1) or (2) above shall be liable to a [F16penalty] not exceeding £1,000.

(5)A company which fails to comply with subsection (3) above shall be liable to a [F16penalty] not exceeding £100.

(6)F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72Clearance services: supplementaryU.K.

(1)References in sections 70 and 71 above to relevant securities, or to relevant securities of a company, are to shares in or stock or marketable securities of any company (which, unless otherwise stated, need not be incorporated in the United Kingdom).

(2)For the purposes of section 70(3) above the value of securities at the date the instrument is executed shall be taken to be the price they might reasonably be expected to fetch on a sale at that time in the open market.

(3)F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F20Transfers between depositary receipt system and clearance system]U.K.

[F2172A Transfers between depositary receipt system and clearance system.U.K.

(1)Where an instrument transfers relevant securities of a company incorporated in the United Kingdom between a depositary receipt system and a clearance system—

(a)the provisions of section 67(2) to (5) or, as the case may be, section 70(2) to (5) above shall not apply, and

(b)the stamp duty chargeable on the instrument is £5.

(2)A transfer between a depositary receipt system and a clearance system means a transfer—

(a)from (or to) a company that at the time of the transfer falls within section 67(6) above, and

(b)to (or from) a company that at that time falls within section 70(6) above.

(3)This section does not apply to a transfer from a clearance system (that is, from such a company as is mentioned in subsection (2)(b) above) if at the time of the transfer an election is in force under section 97A below in relation to the clearance services for the purposes of which the securities are held immediately before the transfer.]

Reconstructions and acquistionsU.K.

F2273. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

74 Reconstructions etc: repeals.U.K.

(1)The following provisions shall cease to have effect—

(a)section 55 of the M4Finance Act 1927 and section 4 of the M5Finance Act (Northern Ireland) 1928 (reconstructions and amalgamations);

(b)paragraph 12(1) and (1A) of Schedule 18 to the M6Finance Act 1980 (demergers);

(c)sections 78, 79 and 80 of the Finance Act 1985 (takeovers and winding-up).

(2)In paragraph 12(3) of Schedule 18 to the Finance Act 1980 for the words “sub-paragraph (2) above” there shall be substituted the words “this paragraph”.

(3)This section applies to any instrument executed in pursuance of a contract made on or after the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

75 Acquisitions: reliefs.U.K.

(1)This section applies where a company (the acquiring company) acquires the whole or part of an undertaking of another company (the target company) in pursuance of a scheme for the reconstruction of the target company.

(2)If the first and second conditions (as defined below) are fulfilled, stamp duty under [F23Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale)]shall not be chargeable on an instrument executed for the purposes of or in connection with the transfer of the undertaking or part.

(3)An instrument on which stamp duty is not chargeable by virtue only of subsection (2) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that subsection or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.

(4)The first condition is that the registered office of the acquiring company is in the United Kingdom and that the consideration for the acquisition—

(a)consists of or includes the issue of [F24non-redeemable] shares in the acquiring company to all the shareholders of the target company;

(b)includes nothing else (if anything) but the assumption or discharge by the acquiring company of liabilities of the target company.

[F25In paragraph (a) above, “non-redeemable shares” means shares which are not redeemable shares.]

(5)The second condition is that—

(a)the acquisition is effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to stamp duty, income tax, corporation tax or capital gains tax,

(b)after the acquisition has been made, each shareholder of each of the companies is a shareholder of the other, and

(c)after the acquisition has been made, the proportion of shares of one of the companies held by any shareholder is the same as the proportion of shares of the other company held by that shareholder.

(6)This section applies to any instrument which is executed after 24th March 1986 unless it is executed in pursuance of an unconditional contract made on or before 18th March 1986.

(7)This section shall be deemed to have come into force on 25th March 1986.

76 Acquisitions: further provisions about reliefs.U.K.

(1)This section applies where a company (the acquiring company) acquires the whole or part of an undertaking of another company (the target company).

(2)If the condition mentioned in subsection (3) below is fulfilled, and stamp duty under [F26Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale)] is chargeable on an instrument executed for the purposes of or in connection with—

(a)the transfer of the undertaking or part, or

(b)the assignment to the acquiring company by a creditor of the target company of any relevant debts (secured or unsecured) owed by the target company,

the rate at which the duty is charged under that heading shall not exceed that mentioned in subsection (4) below.

(3)The condition is that the registered office of the acquiring company is in the United Kingdom and that the consideration for the acquisition—

(a)consists of or includes the issue of [F27non-redeemable shares (within the meaning of section 75(4)(a) above)] in the acquiring company to the target company or to all or any of its shareholders;

(b)includes nothing else (if anything) but cash not exceeding 10 per cent. of the nominal value of those shares, or the assumption or discharge by the acquiring company of liabilities of the target company, or both.

(4)The rate is the rate of [F280.5%] of the amount or value of the consideration for the sale to which the instrument gives effect.

(5)An instrument on which, by virtue only of subsection (2) above, the rate at which stamp duty is charged is not to exceed that mentioned in subsection (4) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for subsection (2) above or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is duly stamped.

(6)In subsection (2)(b) above “relevant debts” means—

(a)any debt in the case of which the assignor is a bank or trade creditor, and

(b)any other debt incurred not less than two years before the date on which the instrument is executed.

(7)This section applies to any instrument executed on or after the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

77Acquisition of target company's share capitalU.K.

(1)Stamp duty under [F29Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale)] shall not be chargeable on an instrument transferring shares in one company (the target company) to another company (the acquiring company) if the conditions mentioned in subsection (3) below are fulfilled.

(2)An instrument on which stamp duty is not chargeable by virtue only of subsection (1) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that subsection or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.

(3)The conditions are that —

(a)the registered office of the acquiring company is in the United Kingdom,

(b)the transfer forms part of an arrangement by which the acquiring company acquires the whole of the issued share capital of the target company,

(c)the acquisition is effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to stamp duty, stamp duty reserve tax, income tax, corporation tax or capital gains tax,

(d)the consideration for the acquisition consists only of the issue of shares in the acquiring company to the shareholders of the target company,

(e)after the acquisition has been made, each person who immediately before it was made was a shareholder of the target company is a shareholder of the acquiring company,

(f)after the acquisition has been made, the shares in the acquiring company are of the same classes as were the shares in the target company immediately before the acquisition was made,

(g)after the acquisition has been made, the number of shares of any particular class in the acquiring company bears to all the shares in that company the same proportion as the number of shares of that class in the target company bore to all the shares in that company immediately before the acquisition was made, and

(h)after the acquisition has been made, the proportion of shares of any particular class in the acquiring company held by any particular shareholder is the same as the proportion of shares of that class in the target company held by him immediately before the acquisition was made.

(4)In this section references to shares and to share capital include references to stock.

(5)This section applies to any instrument executed on or after 1st August 1986.

Loan capital, letters of allotment etc.U.K.

78 Loan capital.U.K.

F30(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)In this section “loan capital” means—

(a)any debenture stock, corporation stock or funded debt, by whatever name known, issued by a body corporate or other body of persons (which here includes a local authority and any body whether formed or established in the United Kingdom or elsewhere);

(b)any capital raised by such a body if the capital is borrowed or has the character of borrowed money, and whether it is in the form of stock or any other form;

(c)stock or marketable securities issued by the government of any country or territory outside the United Kingdom.

F30(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)In this section “designated international organisation” means an international organisation designated for the purposes of section [F31324 of the Taxes Act 1988] by an order made under subsection (1) of that section.

F30(10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(12). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(13). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(14). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

79 Loan capital: new provisions.U.K.

F32(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)Stamp duty under [F33Schedule 15 to the Finance Act 1999 (bearer instruments)] shall not be chargeable on the issue of an instrument which relates to loan capital or on the transfer of the loan capital constituted by, or transferable by means of, such an instrument.

(3)Stamp duty shall not be chargeable on an instrument which transfers loan capital issued or raised by —

(a)the financial support fund of the Organisation for Economic Co-operation and Development,

(b)the Inter-American Development Bank, or

(c)an organisation which was a designated international organisation at the time of the transfer (whether or not it was such an organisation at the time the loan capital was issued or raised).

(4)Subject to subsections (5) and (6) below, stamp duty shall not be chargeable on an instrument which transfers any other loan capital.

(5)Subsection (4) above does not apply to an instrument transferring loan capital which, at the time the instrument is executed, carries a right (exercisable then or later) of conversion into shares or other securities, or to the acquisition of shares or other securities, including loan capital of the same description.

(6)Subject to subsection (7) below, subsection (4) above does not apply to an instrument transferring loan capital which, at the time the instrument is executed or any earlier time, carries or has carried —

(a)a right to interest the amount of which exceeds a reasonable commercial return on the nominal amount of the capital,

(b)a right to interest the amount of which falls or has fallen to be determined to any extent by reference to the results of, or of any part of, a business or to the value of any property, or

(c)a right on repayment to an amount which exceeds the nominal amount of the capital and is not reasonably comparable with what is generally repayable (in respect of a similar nominal amount of capital) under the terms of issue of loan capital listed in the Official List of The Stock Exchange.

(7)Subsection (4) above shall not be prevented from applying to an instrument by virtue of subsection (6)(a) or (c) above by reason only that the loan capital concerned carries a right to interest, or (as the case may be) to an amount payable on repayment, determined to any extent by reference to an index showing changes in the general level of prices payable in the United Kingdom over a period substantially corresponding to the period between the issue or raising of the loan capital and its repayment.

[F34(7A)Subsection (4) above shall not be prevented from applying to an instrument by virtue of subsection (6)(b) above by reason only that the loan capital concerned carries a right to interest which—

(a)reduces in the event of the results of a business or part of a business improving, or the value of any property increasing, or

(b)increases in the event of the results of a business or part of a business deteriorating, or the value of any property diminishing.]

[F35(8)Where stamp duty is chargeable under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) on an instrument which transfers loan capital, the rate at which duty is charged under that Part shall be 0.5% of the amount or value of the consideration for the sale to which the instrument gives effect.]

F32(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32(10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32(11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(12)Subsections (7), (9) F36. . . of section 78 above shall apply as if references to that section included references to this.

F3780. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

[F3880A Sales to intermediaries.U.K.

(1)Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or his nominee if—

(a)the person is a member of an EEA exchange, or a recognised foreign exchange, on which stock of that kind is regularly traded;

(b)the person is an intermediary and is recognised as an intermediary by the exchange in accordance with arrangements approved by the Commissioners; and

(c)the sale is effected on the exchange.

(2)Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or his nominee if—

(a)the person is a member of an EEA exchange or a recognised foreign options exchange;

(b)options to buy or sell stock of that kind are regularly traded on that exchange and are listed by or quoted on that exchange;

(c)the person is an options intermediary and is recognised as an options intermediary by that exchange in accordance with arrangements approved by the Commissioners; and

(d)the sale is effected on an EEA exchange, or a recognised foreign exchange, on which stock of that kind is regularly traded or subsection (3) below applies.

(3)This subsection applies if—

(a)the sale is effected on an EEA exchange, or a recognised foreign options exchange, pursuant to the exercise of a relevant option; and

(b)options to buy or sell stock of the kind concerned are regularly traded on that exchange and are listed by or quoted on that exchange.

(4)For the purposes of this section—

(a)an intermediary is a person who carries on a bona fide business of dealing in stock and does not carry on an excluded business; and

(b)an options intermediary is a person who carries on a bona fide business of dealing in quoted or listed options to buy or sell stock and does not carry on an excluded business.

(5)The excluded businesses are the following—

(a)any business which consists wholly or mainly in the making or managing of investments;

(b)any business which consists wholly or mainly in, or is carried on wholly or mainly for the purpose of, providing services to persons who are connected with the person carrying on the business;

(c)any business which consists in insurance business;

(d)any business which consists in managing or acting as trustee in relation to a pension scheme or which is carried on by the manager or trustee of such a scheme in connection with or for the purposes of the scheme;

(e)any business which consists in operating or acting as trustee in relation to a collective investment scheme or is carried on by the operator or trustee of such a scheme in connection with or for the purposes of the scheme.

(6)A sale is effected on an exchange for the purposes of subsection (1) or (2) above if (and only if)—

(a)it is subject to the rules of the exchange; and

(b)it is reported to the exchange in accordance with the rules of the exchange.

(7)An instrument on which stamp duty is not chargeable by virtue only of this section shall not be deemed to be duly stamped unless it has been stamped with a stamp denoting that it is not chargeable with any duty; and notwithstanding anything in section 122(1) of the M7Stamp Act 1891, the stamp may be a stamp of such kind as the Commissioners may prescribe.]

[F3980B Intermediaries: supplementary.U.K.

(1)For the purposes of section 80A above the question whether a person is connected with another shall be determined in accordance with the provisions of section 839 of the M8Income and Corporation Taxes Act 1988.

(2)In section 80A above and this section—

• “collective investment scheme” has the meaning given in section 75 of the M9Financial Services Act 1986;

• “EEA exchange” means a market which appears on the list drawn up by an EEA State pursuant to Article 16 of European Communities Council Directive No. 93/22/EEC on investment services in the securities field;

• “EEA State” means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on the 2nd May 1992 as adjusted by the Protocol signed at Brussels on the 17th March 1993;

• “insurance business” means long term business or general business as defined in section 1 of the M10Insurance Companies Act 1982;

• “quoted or listed options” means options which are quoted on or listed by an EEA exchange or a recognised foreign options exchange;

• “stock” includes any marketable security;

• “trustee” and “the operator” shall, in relation to a collective investment scheme, be construed in accordance with section 75(8) of the Financial Services Act 1986.

(3)In section 80A above “recognised foreign exchange” means a market which—

(a)is not in an EEA State; and

(b)is specified in regulations made by the Treasury under this subsection.

(4)In section 80A above and this section “recognised foreign options exchange” means a market which—

(a)is not in an EEA State; and

(b)is specified in regulations made by the Treasury under this subsection.

(5)In section 80A above “the exercise of a relevant option” means—

(a)the exercise by the options intermediary concerned of an option to buy stock; or

(b)the exercise of an option binding the options intermediary concerned to buy stock.

(6)The Treasury may by regulations provide that section 80A above shall not have effect in relation to instruments executed in pursuance of kinds of agreement specified in the regulations.

(7)The Treasury may by regulations provide that if—

(a)an instrument falls within subsection (1) or (2) of section 80A above, and

(b)stamp duty would be chargeable on the instrument apart from that section,

stamp duty shall be chargeable on the instrument at a rate, specified in the regulations, which shall not exceed 10p for every £100 or part of £100 of the consideration for the sale.

(8)The Treasury may by regulations change the meaning of “intermediary” or “options intermediary” for the purposes of section 80A above by amending subsection (4) or (5) of that section (as it has effect for the time being).

(9)The power to make regulations under subsections (3) to (8) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.]

[F4080C Repurchases and stock lending.U.K.

(1)This section applies where a person (A) has entered into an arrangement with another person (B) under which—

(a)B is to transfer stock of a particular kind to A or his nominee, and

(b)stock of the same kind and amount is to be transferred by A or his nominee to B or his nominee,

and the conditions set out in subsection (3) below are fulfilled.

(2)Stamp duty shall not be chargeable on an instrument transferring stock to B or his nominee or A or his nominee in accordance with the arrangement.

(3)The conditions are—

(a)that the arrangement is effected on an EEA exchange or a recognised foreign exchange; and

(b)that stock of the kind concerned is regularly traded on that exchange.

(4)An arrangement does not fall within subsection (1) above if—

(a)the arrangement is not such as would be entered into by persons dealing with each other at arm’s length; or

(b)under the arrangement any of the benefits or risks arising from fluctuations, before the transfer to B or his nominee takes place, in the market value of the stock accrues to, or falls on, A.

(5)An instrument on which stamp duty is not chargeable by virtue only of subsection (2) above shall not be deemed to be duly stamped unless it has been stamped with a stamp denoting that it is not chargeable with any duty; and notwithstanding anything in section 122(1) of the M11Stamp Act 1891, the stamp may be a stamp of such kind as the Commissioners may prescribe.

(6)An arrangement is effected on an exchange for the purposes of subsection (3) above if (and only if)—

(a)it is subject to the rules of the exchange; and

(b)it is reported to the exchange in accordance with the rules of the exchange.

(7)In this section—

• “EEA exchange” has the meaning given in section 80B(2) above; and

• “recognised foreign exchange” has the meaning given in section 80B(3) above.

(8)The Treasury may by regulations provide that if stamp duty would be chargeable on an instrument but for subsection (2) above, stamp duty shall be chargeable on the instrument at a rate, specified in the regulations, which shall not exceed 10p for every £100 or part of £100 of the consideration for the transfer.

(9)The Treasury may by regulations amend this section (as it has effect for the time being) in order—

(a)to change the conditions for exemption from duty under this section; or

(b)to provide that this section does not apply in relation to kinds of arrangement specified in the regulations.

(10)The power to make regulations under subsection (8) or (9) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.]

F4181. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F4282. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F4383. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F4484Miscellaneous exemptionsU.K.

(1)In section 127(1) of the Finance Act 1976 M12(no stamp duty on transfer to stock exchange nominee executed for purposes of a stock exchange transaction) the words “ which is executed for the purposes of a stock exchange transaction ” shall be omitted.

(2)Stamp duty shall not be chargeable on an instrument effecting a transfer of stock if —

(a)the transferee is a recognised investment exchange or a nominee of a recognised investment exchange, and

(b)an agreement which relates to the stamp duty which would (apart from this subsection) be chargeable on the instrument, and was made between the Commissioners and the investment exchange under section 33 of the Finance Act 1970, is in force at the time of the transfer.

(3)Stamp duty shall not be chargeable on an instrument effecting a transfer of stock if —

(a)the transferee is a recognised clearing house or a nominee of a recognised clearing house, and

(b)an agreement which relates to the stamp duty which would (apart from this subsection) be chargeable on the instrument, and was made between the Commissioners and the clearing house under section 33 of the Finance Act 1970 M13, is in force at the time of the transfer.

(4)Subsection (1) above applies to any transfer giving effect to a transaction carried out on or after the day of The Stock Exchange reforms.

(5)Subsection (2) above applies to any instrument giving effect to a transaction carried out on or after such day as the Commissioners may appoint by order made by statutory instrument.

(6)Subsection (3) above applies to any instrument giving effect to a transaction carried out on or after such day as the Commissioners may appoint by order made by statutory instrument.

85SupplementaryU.K.

(1)Section 42(1) of the Finance Act 1920 M14 (reduction of duty in case of certain transfers to jobbers or nominees or qualified dealers) shall have effect, in the case of any transfer giving effect to a transaction carried out on or after the day of The Stock Exchange reforms as if the following were omitted —

(a)in that subsection, the words “ a jobber or his nominee or to”and in the proviso to it the words “jobber or”(in each place);

(b)in subsection (3) of that section, paragraph (d) of the definition of “qualified dealer”(Stock Exchange brokers).

(2)Section 34 of the Finance Act 1961 M15 and section 4 of the Finance Act (Northern Ireland) 1961 M16 (borrowing of stock by jobbers) shall not apply where stock is transferred in discharge of an undertaking given on or after the day of The Stock Exchange reforms.

(3)Section 42(1) of the Finance Act 1920 shall not apply to any transfer giving effect to a transaction carried out on or after such day as is specified for this purpose in regulations made under section 81(5) above; and different days may be so specified for different purposes.

(4)Section 127(2) of the Finance Act 1976 M17 (transfer otherwise than on sale from stock exchange nominee to jobber) shall not apply to any transfer giving effect to a transaction carried out on or after the day of The Stock Exchange reforms.

(5)In sections 81, 82 and 84 above and this section—

(a)“the day of The Stock Exchange reforms” means the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished,

(b)references to a recognised investment exchange are to a recognised investment exchange within the meaning of the Financial Services Act 1986,

(c)references to a recognised clearing house are to a recognised clearing house within the meaning of the Financial Services Act 1986, and

(d)“stock” includes marketable security.