HMRC looks at modernising stamp taxes on shares

The tax office has issued a call for evidence on the principles, priorities and design of a new framework for stamp duty and stamp duty reserve tax (SDRT), as a first stage in plans to modernise and digitise the regime for handling stamp taxes on shares

The government says it is aware that stamp duty, as a paper-based regime, is often regarded as an anachronistic feature of the UK tax system. SDRT has to be considered in the context of stamp duty modernisation as the two taxes are interdependent.

Stamp duty and SDRT are interdependent, with SDRT relying on elements of the Stamp Duty regime for its operation, with the government saying modernisation raises questions about the separate existence of the two taxes.

An Office of Tax Simplification (OTS) report recommended that the processes be digitised and modernised, while the need to temporarily halt manual processes in response to Covid-19, has further highlighted these issues.

As a result, the government states that the time is right to explore options for fundamental redesign of the stamp duty and, where necessary, SDRT frameworks. Modernisation of the STS regime is not something that can easily be achieved through piecemeal change, so the call for evidence is therefore envisaged as a first step in a longer-term project with potentially several stages of consultation and new legislation.

The stamp taxes on shares (STS) framework is the legislation, guidance and administrative processes that allow HMRC to administer stamp duty and SDRT effectively.

It defines the obligations on HMRC and taxpayers, including when and how taxpayers must notify an obligation to pay tax; how liability is calculated and agreed, including determining eligibility for reliefs and exemptions; how tax is collected (for example compliance powers, penalties and interest); and how disputes are managed.

The call for evidence asks for views on what the principles and design of a new framework for STS should be, and on prioritising changes within the overall modernisation programme.

It seeks information about issues including how tax on securities is implemented and collected in other overseas tax systems, the impacts, benefits or drawbacks of combining stamp duty and SDRT, whether there should be a greater element of self-assessment, enforcement options, and the use of electronic payments.

The call for evidence closes on 13 October.

Call for evidence: modernisation of the stamp taxes on shares framework

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