Revenue Note for Guidance

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Revenue Note for Guidance

Section 69 Operator-instruction deemed to be an instrument of conveyance or transfer

Summary

This section charges stamp duty on securities title to which is transferred electronically through the relevant system i.e. CREST.

Details

(1) The electronic message (i.e. the operator-instruction) sent by the operator of the system, CRESTCo., to the Registrar of a company instructing that Registrar to update the register is deemed to be an executed instrument of conveyance or transfer. This subsection also provides that that message is deemed to be executed on the date it is generated.

(2) Where an operator-instruction is generated in relation to the transfer of an equitable interest in securities that instruction is also chargeable to duty as an instrument of conveyance or transfer. This is designed to cater for a situation where the same nominee is acting for both the vendor and purchaser of shares: in such situations only an equitable interest in the shares is being transferred.

(3) Where no operator-instruction is generated in connection with the transfer through a relevant system of an equitable interest in securities, that transfer is, for the purposes of this Part, deemed to have been effected by an operator-instruction generated on the date of the transfer. This provision is necessary to ensure that shares transferred within the pool nominee (CREPON)1 operated by CRESTCo. do not escape liability to stamp duty.

(4) Where there is a transfer of title to securities through a relevant system in respect of a single netted settlement of 2 or more contracts for the sale of securities, the operator-instruction giving effect to that transfer is deemed to be a separate operator-instruction (generated on the date of the operator-instruction for the single netted settlement) for each of the contracts involved so that each deemed conveyance or transfer is chargeable to stamp duty. Transfers of title to securities falling within this subsection are not chargeable under subsection (1) so a double charge is avoided.

(5) Where there is no operator-instruction generated because the effect of a single netted settlement of 2 or more contracts for the sale of securities is that an operator-instruction is not necessary, a separate operator-instruction is deemed to have been generated on the date of the single netted settlement in respect of each contract included in the single netted settlement. Each deemed operator-instruction is deemed to be an executed conveyance or transfer of the securities in the contracts concerned and the date of execution of each conveyance or transfer is the date of the single netted settlement.

1CREPON was established in response to concerns expressed by market makers that it would be damaging to their ability to provide a market if they could be seen to be building up, or disposing of, large shareholdings. CREPON meets these concerns by keeping the individual market maker’s name off the share register. Transfers to CREPON are liable to ad valorem duty if the beneficial interest passes.

Relevant Date: Finance Act 2014