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Is there a time limit for a S.77 FA1986 claim?

Is there a time limit for a claim of relief for stamp duty under Section 77 of the Finance Act 1986

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Is there a time limit for a claim of relief for stamp duty under Section 77 of the Finance Act 1986 please? Searched all over the place and can't find the information?

Thanks.

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By Tax Dragon
01st Jul 2019 17:38

Are you looking for the right thing?

I don't see how your question arises unless a return was incorrect.

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By Justin Bryant
01st Jul 2019 18:11

I recall in practice this is 6 years re the SDRT/SD interaction.

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By Tax Dragon
02nd Jul 2019 09:16

Am I looking at the right thing?!

FA1986, check; s77, check; SDRT/SD interaction... nope; claim... uh-uh.

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Replying to Tax Dragon:
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By Justin Bryant
02nd Jul 2019 09:30

It's not that simple a point & I would not expect someone like you (who does not specialise in SD) to understand, but as I say that is the practical time limit as I recall when I last looked at this about 10 years ago.

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Replying to Justin Bryant:
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By Tax Dragon
02nd Jul 2019 14:27

I take your point, Justin. You are right about my knowledge of the answer. I could not have given it. I do know enough about reading legislation though to know that the question did not make sense and that newmoon's search was "all over the place" because s/he was looking for the wrong thing.

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By pridgway
02nd Jul 2019 11:15

When you transfer chargeable securities there are two charges arising: first, a charge to SDRT; and secondly a charge to stamp duty. The charge to SDRT is franked by the payment of stamp duty. The stamp duty charge is eliminated by a claim to relief from duty under s77, FA 1986.

So do you have an interaction of SDRT with stamp duty? ... yep. Stamp duty has to be paid within 30 days. So in theory you need to make the claim within 30 days to get rid of the duty and frank the SDRT. There may be interest and penalties for late submission but generally a successful claim to s77 will clear everything up. And SDRT does have a six year period.

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Replying to pridgway:
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By Tax Dragon
02nd Jul 2019 11:22

What about s77 requires a claim? It starts with "stamp duty… shall not be chargeable"” and does not at any point refer to a claim.

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Replying to Tax Dragon:
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By Vile Nortin Naipaan
02nd Jul 2019 11:24

READ MY LIPS: IT ISN'T A CLAIM. IT ISN'T A CLAIM.

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Replying to Vile Nortin Naipaan:
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By Tax Dragon
02nd Jul 2019 11:27

The still small voice of sanity makes its appearance.

Thank you. (Again.)

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Replying to Vile Nortin Naipaan:
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By Tax Dragon
02nd Jul 2019 11:28

(And could that be why it doesn't have a time limit?)

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By Vile Nortin Naipaan
02nd Jul 2019 11:26

Ignore Justin, who hasn't got the first fuching clue.

The point is that it isn't a claim, as such. And the distinction between SD and SDRT is generally an irrelevance in practice in relation to transfers of shares in a private company.

You have a document transferring shares from one party to another. Technically that document does not have legal effect unless it is stamped.

You can either:
i) pay the stamp duty,
ii) jump through the hoops to get it adjudicated as exempt from ad valorem stamp duty under s 77, or
iii) hope nobody ever notices. There's a good chance they won't.

If you go down route (i) you need to get the document stamped within 30 days of execution, for there to be no penalty or interest.

If you go down route (ii) you need to get the document adjudicated within one year and 30 days of execution, otherwise there's a £300 penalty.

As long as route (ii) was a genuine possibility, then going down route (iii) may delay the penalty indefinitely.

https://www.gov.uk/hmrc-internal-manuals/stamp-taxes-shares-manual/stsm1...

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Replying to Vile Nortin Naipaan:
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By Tax Dragon
02nd Jul 2019 11:25

Thank you.

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Replying to Vile Nortin Naipaan:
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By Vile Nortin Naipaan
02nd Jul 2019 11:37

Erratum: Well, Philip's observation shows Justin to be less of an @r5e than I think he is!

If you go down route (iii) and somebody does find out (particularly if that somebody is HMRC), after the end of the 6 year period, you could then be liable to the full SDRT, it seems.

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Replying to Vile Nortin Naipaan:
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By Justin Bryant
11th Jul 2019 10:45

Philip Ridgway and I are both members of the STPG, so it would be a bit surprising if we were both wrong about the effective 6 year time limit. Philip has reminded me of the full explanation below.

To avoid double charging, FA86/S92 provides that an SDRT charge is cancelled in certain circumstances where an instrument has been executed in respect of the transfer of securities. For the section to apply, the instrument must cover all the chargeable securities and either must be duly stamped or not be required to be stamped. If these conditions are met then the SDRT charge is cancelled.

http://www.hmrc.gov.uk/manuals/stsmanual/STSM041030.htm

The time limit is effectively 6 years, as that is how long the SDRT s92 FA 1986 franking lasts. See

http://www.hmrc.gov.uk/manuals/stsmanual/STSM041030.htm

http://www.legislation.gov.uk/ukpga/1986/41/pdfs/ukpga_19860041_en.pdf

However, the are Stamp Duty penalties if the STF is not stamped within 30 days (and 3.25% p.a. interest if the SD is not paid by then), so the time limit overall is effectively 30 days.

https://www.gov.uk/guidance/stamp-duty-penalties-appeals-and-interest

There are also the additional practical and potential penalty problems in not stamping the STF per the link below, the main one being that the new owner cannot be entered as the new owner in the members register (and therefore not at Companies House):

https://www.gov.uk/hmrc-internal-manuals/stamp-taxes-shares-manual/stsm1...

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Replying to Justin Bryant:
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By Vile Nortin Naipaan
11th Jul 2019 11:00

The penalties and interest are a proportion of the duty. No duty means no penalty and no interest. Your other points have already been acknowledged.

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