Finance Act 1986

96Clearance servicesU.K.

(1)Subject to subsection (5) below and section 97 below, there shall be a charge to stamp duty reserve tax under this section where —

(a)a person (A) whose business is or includes the provision of clearance services for the purchase and sale of chargeable securities has entered into an arrangement to provide such clearance services for another person, and

(b)in pursuance of the arrangement, chargeable securities are transferred or issued to A or to a person whose business is or includes holding chargeable securities as nominee for A.

(2)Subject to subsections (3) to (5) below, tax under this section shall be charged at the rate of [F11.5 per cent.] of the following —

(a)in a case where the securities are issued, their price when issued;

(b)in a case where the securities are transferred for consideration in money or money's worth, the amount or value of the consideration;

(c)in any other case, the value of the securities.

(3)In a case where the securities are transferred and —

(a)the transfer is effected by an instrument on which stamp duty under the heading “Conveyance or Transfer of any kind not hereinbefore described” in Schedule 1 to the Stamp Act 1891 F2 is chargeable,

(b)at the time of the transfer the transferor is a qualified dealer in securities of the kind concerned or a nominee of such a qualified dealer,

(c)the transfer is made for the purposes of the dealer's business,

(d)at the time of the transfer the dealer is not a market maker in securities of the kind concerned, and

(e)the instrument contains a statement that paragraphs (b) to (d) above are fulfilled,

subsection (2) above shall have effect [F3 as if “1.5 per cent.” read “1 per cent.”]

(4)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)subsection (2)(c) above applies in the case of the transfer to the other person,

(d)before the making of the transfer to the other person an instrument is received by A or a person whose business is or includes holding chargeable securities as nominee for A,

(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 transfer to the other person is effected by an instrument containing a statement that paragraphs (a), (b) and (e) above are fulfilled,

subsection (2)(c) 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.

(5)Where tax is (or would apart from this subsection be) charged under this section in respect of a transfer of securities and ad valorem stamp duty is chargeable on any instrument effecting the transfer, then —

(a)if the amount of the duty is less than the amount of tax found by virtue of subsections (2) to (4) above, the tax charged under this section shall be the amount so found less the amount of the duty;

(b)in any other case, there shall be no charge to tax under this section in respect of the transfer.

(6)Where tax is charged under the preceding provisions of this section, the person liable for the tax shall (subject to subsection (7) below) be A.

(7)Where tax is charged under the preceding provisions of this section in a case where securities are transferred to a person other than A, and at the time of the transfer A is not resident in the United Kingdom and has no branch or agency in the United Kingdom, the person liable for the tax shall be the person to whom the securities are transferred.

(8)Where chargeable securities are issued or transferred on sale under terms providing for payment in instalments and for an issue of other chargeable securities, and (apart from this subsection) tax would be charged under this section in respect of that issue, tax shall not be so charged but —

(a)if any of the instalments becomes payable by A or by a person whose business is or includes holding chargeable securities as nominee for A, there shall be a charge to stamp duty reserve tax under this section when the instalment becomes payable;

(b)the charge shall be at the rate of [F41.5 per cent. of the amount] of the instalment payable;

(c)the person liable to pay the instalment shall be liable for the tax.

(9)For the purposes of subsection (2)(b) above the value of any consideration not consisting of money shall be taken to be the price it might reasonably be expected to fetch on a sale in the open market at the time the securities are transferred.

(10)For the purposes of subsection (2)(c) above the value of securities shall be taken to be the price they might reasonably be expected to fetch on a sale in the open market at the time they are transferred.

(11)For the purposes of subsection (3) above “qualified dealer” and “market maker” have at any particular time the same meanings as they have at that time for the purposes of section 93(5) above.

(12)F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13)Subject to subsection (14) below, this section applies where securities are transferred or issued after 18th March 1986 (whenever the arrangement was made).

(14)This section does not apply, in the case of securities which are transferred, if the Board are satisfied —

(a)that on or before 18th March 1986 the transferor (or, where the transferor transfers as agent, the principal) agreed to sell securities of the same kind and amount to the person (other than A) referred to in subsection (1)(a) above, and

(b)that the transfer is effected in pursuance of that agreement.