COVID-19: Temporary changes to the payment of Stamp Duty

The effects of the new government measures implemented to stop the spread of coronavirus (COVID-19) are far reaching and unprecedented. As a response to these, HMRC has published new guidance (available here) outlining the temporary changes which are intended to manage the payment of Stamp Duty during this period.

Stamp Duty is payable to HMRC’s Stamp Office when shares are bought using a stock transfer form if the amount paid for the shares is over £1,000. This should not be confused with the payment of Stamp Duty Reserve Tax or Stamp Duty Land Tax, which are not covered here.

In summary, under the new measures:

• Stamp Duty must be paid electronically using online banking, BACS or CHAPS; and
• details of the transaction must be emailed to HMRC, rather than sent in by post.

Payment process

All Stamp Duty must now be paid electronically via online banking, BACS or CHAPS. Payment using online banking or CHAPS should be processed on the same or next day, but payments using BACS are usually processed within three working days. The consequences of not paying Stamp Duty to HMRC by the deadline (30 days after the stock transfer documents have been dated and signed) include a penalty, interest or both. Please note that cheques sent to HMRC will not be banked until COVID-19 measures end, which means that the transaction details sent to HMRC by email will not be processed. If, for whatever reason, an electronic payment cannot be made, HMRC should be notified using the following email address: stampdutymailbox@hmrc.gov.uk.

A payment reference will need to be provided so that HMRC can identify the payment. This reference should be the payee’s name followed by the payment amount (ignoring spaces), for example: JSmith/240.00. The account details for the HMRC Stamp Office can be found in the guidance mentioned above.

Steps to take following payment

After the Stamp Duty payment has been made, details of the transaction must be emailed to HMRC at:  stampdutymailbox@hmrc.gov.uk. The email should include:

• the payment reference;
• the payment amount;
• the date of payment; and
• an electronic copy (for example, a scanned PDF) of either:
  • the signed and dated stock transfer form;
  • the instrument of transfer; or
  • a form SH03 for return of purchase of own shares.

HMRC has stated that details relating to any power of attorney used (if any) should be included in the email and that it will also accept e-signatures while COVID-19 measures are in place.

Furthermore, if the stock transfer form or instrument of transfer does not include the following details, these will also need to be covered in the email:

• the name of the company whose shares are being transferred;
• the amount and type of shares being transferred, including date of transfer;
• the parties to the transaction; and
• the amount of consideration.

HMRC has stated that it will respond to the email sender (via email) if they have any questions. If there are no issues with the transaction and HMRC has successfully processed it, a confirmation letter will be sent by email. For the avoidance of doubt, no stock transfer forms are currently being stamped by HMRC.

Comment

We are pleased to see that the Stamp Office has been flexible in its approach to the payment of Stamp Duty and have taken steps which reflect the fact that a large number of people (no doubt including HMRC staff) are now working from home. It will be interesting to keep an eye on the extent to which these new measures remain in place once a return to office-based working becomes possible.

For further information on this development please contact any member of our Corporate & Commercial team.

For an update on all the legal implications relating to Coronavirus please see here.

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