The COVID-19 pandemic has had an immediate impact on the number of corporate completions taking place with many aborting or being substantially delayed. For the transactions that are still going ahead, HMRC and Companies House have implemented temporary measures in relation to the payment of stamp duty on share purchases.
Under normal circumstances, stock transfer forms, or Form SH03, where a company purchases its own shares, would have to be sent for stamping to HMRC and accompanied by a cheque in payment of the appropriate amount of Stamp Duty.
However, as a precaution to staff and to reduce the risk of spreading the virus, HMRC and Companies House have temporarily closed the stamp presses and issued interim guidance on changes regarding how stock transfer forms should be stamped during this time.
What are the Changes to Paying Stamp Duty on Shares?
Stock transfer forms and other transfer instruments should no longer be posted to HMRC for stamping. Instead, a new procedure has been implemented where an electronic copy of the document is emailed to HMRC at [email protected].
Payment of stamp duty must first be made to HMRC by bank transfer quoting a unique reference, details of the transaction and a copy of the transfer instrument should then be sent to HMRC to the email address above quoting the same reference. HMRC will only process the document for stamping once payment has been successfully made. Payments by cheque will no longer be accepted by HMRC until further notice.
Inevitably, there will be circumstances where forms or instruments have already been sent by post to HMRC. In this case, those forms should be resubmitted electronically together with details of any payments already made; if not, the instruments will not be assessed or returned until the temporary Coronavirus measures are lifted.
HMRC has said that they aim to deal with 80% of forms within 15 working days of receipt, which is in line with their usual turnaround time.
Once they have checked the document and received payment of the Stamp Duty, an email will be sent, along with a letter to confirm receipt of the Stamp Duty.
The letter should then be sent, together with the stock transfer form, to the company that you have purchased shares in. The company will then issue a new share certificate. In circumstances where a company has completed a buyback of its own shares, then the Form SH03 will still need to be submitted to Companies House together with a copy of the letter issued by HMRC.
HMRC has described these measures as ‘temporary’, however there is an argument to say that they may actually be an improvement on the normal system of submitting forms and instruments for stamping in the post. It remains to be seen whether the temporary measures prove to be effective but if they are, they may be here to stay.