Regulation  

HMRC to overhaul stamp duty assessments

HM Revenue & Customs is overhauling the way it calculates the amount of stamp duty tax it is due and plans to make the new system live in June 2014.

According to HMRC, there has been an increasing trend recently for gross transactions in stocks and shares to be aggregated or netted off outside of current assessment system Crest before settlement, which means the system’s operator EUI cannot assess the gross transactions as the legislation requires.

The aim of the new enhanced stamp duty assessment service is to help rebalance the established market practice of gross transactions being sent for reporting and assessment for stamp duty at a centralised point.

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Set to go live in June 2014, the new service will allow businesses to report their gross transactions separately to a central point for stamp duty assessment only, while ensuring that those who wish to can still settle transactions on an aggregated or net basis in Crest.

Businesses that settle their transactions in Crest on a normal gross basis, or use the netting functionality within Crest will not be affected, as transactions will be assessed using the already established stamp duty assessment process.

The new assessment service will be operated separately, but will closely follow the established stamp duty market practice in Crest.

Where an aggregated or net transaction is input to Crest as a delivery settlement instruction, the transaction will need to be flagged with a new ‘net’ stamp flag.

Where a ‘net’ stamp flag is entered, the transaction will settle under normal Crest settlement discipline, but will not be assessed for stamp duty.

The underlying gross transactions will then need to be reported separately to the new stamp duty assessment service.

Compatible messaging formats will likely be used to send gross transactions over a secure internet connection.