Stamp Taxes - SDRT Assurance Code Of Practice - SDRT inspections

Stamp Taxes is committed to providing the best quality service in the business of government.

We want our customers to pay only the right amount of tax, and we will do everything we can to ensure this happens.

Securities

Part IV of Finance Act 1986 provides for tax known as stamp duty reserve tax (SDRT) to be charged on certain agreements to transfer securities. Most of the provisions relating to the collection and recovery of the tax are contained in The Stamp Duty Reserve Tax Regulations 1986 (Statutory Instruments 1986 No. 1711) as amended.

SDRT is payable where there is an agreement to transfer chargeable securities for money or money’s worth. It is not payable when a stock transfer form has been drawn up which is

either

  • Stamped with the appropriate duty
    or
  • Exempt from Stamp Duty
    and
  • The Stamp Duty paid or the exemption, as the case may be, is not to be disregarded for the purposes of SDRT.

Unit Trusts and Open Ended Investment Companies (OEIC’S)

Part II of Schedule 19 to the Finance Act 1999 provides for SDRT to be charged on certain surrenders and other transfers of units in a Unit Trust scheme. Corresponding charges to SDRT apply to transactions in shares in OEIC’s as provided in The Stamp Duty and stamp duty reserve tax (Open-ended Investment Companies) Regulations 1997 (Statutory Instruments 1997 No.1156) as amended. The provisions for the administration and payment of the tax are contained in Statutory Instrument 1999 No.3264. This requires a separate notice to be submitted for each Unit Trust scheme or OEIC.

Our aim is to help our customers meet our requirements and pay the correct amount of SDRT. Most people already do so, but there are occasions when the duty is miscalculated, so from time to time we inspect samples of securities dealers’ and Unit Trust scheme and OEIC records to ensure that they are complete and correct.

When your records are inspected, you still have the same rights as any other taxpayer.

Stamp Taxes, SDRT Operations, Birmingham has an Assurance Team responsible for ensuring that all securities dealers, Unit Trust Managers and Authorised Corporate Directors comply with the SDRT Regulations in force. Their address is given at the back of this leaflet.

This Code of Practice tells you how we will carry out our inspections, the standards which you can expect from us, and the rights which you have.

Our promise to you……

In carrying out our inspections we will abide by the commitments which we give in the Taxpayer’s Charter.

You can expect to be dealt with:-

  • Courteously
  • Fairly
  • Efficiently

We aim to work accurately and to provide you with the appropriate help and advice.

Putting things right……

If we discover that incorrect claims or notices have been made, we aim to:-

  • Collect the amount of tax that should have been accounted for
  • Recover any excess repayment
  • Collect any interest and penalties due as a result.

We promise to complete our work as soon as we are satisfied that everything is in order, or is settled.

Stamp Duty

This Code of Practice is written in terms of the legislation as it applies to SDRT. However, due to the interaction of SDRT with Stamp Duty, it may exceptionally be the case that Stamp Duty legislation will prevail over the SDRT legislation and we will act accordingly.

We will maintain confidentiality in dealing with your business

  • We will give your records and information the same high degree of confidentiality, which all taxpayers receive.
  • We will give information to people whom you have not authorised to receive it only on the very limited circumstances allowed by the law (such as at Appeal Commissioners hearings). The information obtained will not be used for any unauthorised purpose. Most inspection powers limit the use to which information about your clients or your own affairs are put.

Do I need professional representation?

  • As the accountable person, you are responsible for the accuracy of your own notices. You do not have to do so but, at any time during the inspection, you may appoint a professional representative to act on your behalf. If you want us to, we can correspond directly with your appointed representative; your representative may of course be present during the inspection.

What does an inspection involve?

  • We make inspection visits regularly as part of an inspection programme. Most inspections are routine so an inspection does not usually mean that we doubt the accuracy of your CREST transaction inputs or SDRT notices.
  • The purpose of an inspection is to test the completeness and correctness of your records.
  • We will send you notice of our intention to inspect your records and we will remind you that you should consider informing your professional representative, if you have one, about the inspection.
  • You should tell us at the outset of our inspection if you discover that additional SDRT should have been paid or included in earlier notices.
  • We have a statutory right to inspect your records. We aim to give you no less than three weeks notice of an inspection visit but very exceptionally we may not be able to give you the usual notice of an inspection visit. We will tell you how long we expect the visit to last and what records we will want to examine. We will try to give you more notice if your business is complex and you are likely to need extra time to make necessary arrangements. If our proposed date is inconvenient, we will arrange another time within a reasonable period, if at all possible.

Keeping your costs to a minimum

  • We will be aware throughout the inspection that dealing with our enquiries can take up your time and that you will have to pay the fees of any representative which you employ; we aim to keep all such costs to a minimum.
  • We will make sure that the scope and nature of our enquiries are reasonable and take into account all of the circumstances known to us at the time.
  • You can, of course, remain with us throughout the inspection visit if you wish, but equally you do not have to be there so long as there is someone available to answer any questions we might have.
  • We will try to keep our inspection visit brief but the length of an inspection may vary from firm to firm, depending on size and complexity.
  • We will end the inspection as soon as we are satisfied that your records are correct, or that all errors involving more than a trivial amount of tax have been brought to light.
  • We will try not to disrupt your business. It will help if you can provide somewhere for us to work where we will not interfere with your day-to-day operations.
  • You have the right to know why we are not satisfied; if you have provided all the information and explanations which you think are necessary, but the inspection is still continuing, we will tell you why we need to continue the inspection.
  • You can help speed up the inspection if you can give us all the relevant records at the beginning and if you tell us anything which you think may help us to understand them, particularly if there is anything special or unusual about your record keeping system.

What happens during an inspection?

  • We will always be courteous and fair.
  • We will be aware that some of the information we request may be sensitive and we will ask only for what we believe to be necessary.
  • We will need to obtain information about your systems direct from your staff even if you are professionally represented.
  • We will deal promptly with letters from you or your representative – normally within our 28 day target for replies – but we will let you know when we cannot respond within that time, for instance, because of the amount or complexity of the material we have to examine.
  • If we borrow your records (either in paper or electronic format) we will acknowledge receipt of them, keep them safe and return them to you as soon as we can. If you ask us for copies we will provide them free of charge within 7 days.

What information do I need to supply to Stamp Taxes?

  • We will need and are entitled to see all books, documents and other records relating to any relevant transactions to which you have been a party; this extends to records maintained on computer. You should therefore maintain full and accurate records of all of your transactions. If, for any reason, you think your records might not be complete or correct then you should tell us as soon as possible.
  • We will usually need to examine your records at the place where they are normally kept. We may want to speak to the people who keep the records or maintain your system but we will ask your permission before doing so. If necessary, we will examine your records elsewhere but you must ensure that all the records, including any computer records, are fully available. If your principal place of business is outside the UK, you will need to advise us of a UK location where these may be examined.
  • You should ask if you are unsure which records we may inspect. We will explain our inspection powers to you.
  • We will normally select a representative sample of transactions for checking. We will explain to you how the sample is or was extracted. You may need to provide sufficient information to enable us to select a representative sample of transactions. You can check that the sample taken is unbiased. You can let us know if you think that it is unrepresentative.
  • We will try to take up as little of your time as possible by asking everything we need to know early in the inspection. We will do our best to avoid asking for information in a piecemeal way, but new points may come up as we look at your records.
  • We will give you a reasonable amount of time to provide any information we have requested.
  • You should tell us if you think that we have not given you enough time to provide information, and suggest another timescale. We will either agree a new time for delivery or explain to you why we do not think it is right to do so.
  • We will give you the opportunity to give us all the information we need to explain any apparent mistakes or omissions from your records. If we can agree with your explanations we will close that line of enquiry, but if we cannot we will tell you why.
  • You should respond promptly if we ask for information. If you co-operate with us in our enquiries it will help keep everyone’s cost down and will limit any penalties that you may eventually have to pay if you have overclaimed or underpaid tax.
  • You should tell us if you cannot obtain information and we will discuss with you how else to provide it. You should also tell us if you think the information we have asked for is not relevant to the inspection and why you think this is the case. We will consider what you have said and tell you if we need it.
  • We do have statutory powers to obtain necessary information but we will use these only if you do not agree to give us what we need once we have explained why we have asked for it.
  • You and your employees do not have to answer any questions we put to you, and you may want to ask your professional advisor before replying. But you are the only people who know how your records have been kept and what payments have been made, so assisting us can help speed matters up.

What information will Stamp Taxes give me about the visit?

  • We will explain your legal right and the reasons for any actions we take as the inspection proceeds. We will tell you, for example:
    • why we need to see particular records;
    • why we need to seek explanations from you or your employees, or, exceptionally, from your professional advisors;
    • why we are not satisfied with your explanations, whenever that is the case;
      and
    • how we have arrived at our proposals to settle matters.
  • You can ask us at any time to explain your rights, or why we have taken a particular action, or what you are obliged to do under the law in any given situation, even if we have already told your advisors.

Discussing the visit with you

  • As part of or subsequent to the inspection, we may want to talk to you about those facts which only you know about your business and the schemes you operate.
  • You may invite your advisors to attend any meetings with you.
  • You do not have to come to any meetings we ask you to attend but meetings allow you to clarify and explain any points you think we may not have understood, and they allow us to ask questions as well. All of this can take much longer by correspondence.
  • We will make a record of any meeting we have with you for our purposes. You can ask for a copy of the record we have made of a meeting. You have the right to comment on what it says and tell us about any matter which you do not agree with.

Will I get a report of the inspection?

  • We will give you a brief summary of our findings at the end of each inspection visit and we will also make informal recommendations about any improvement to your systems which appear to be necessary.
  • We will also send you, usually within 28 days of the inspection, a full report of the inspection visit. This will set out what we have examined, the extent of the work done, the findings, our conclusions and recommendations. You will be sent a copy of the inspection report, including recommendations, even if no errors are found.
  • You will have an opportunity to disagree with any of the findings.

What if errors are found?

  • If we identify errors during the inspection and these indicate that recovery of tax is due we will seek to determine the amount of any recovery by agreement with you.
  • We will ensure that any recoveries which we quantify or estimate are reasonable in the light of all available information.
  • You should provide the information necessary to let us work out the amount of tax which needs to be recovered. If you do not understand our proposals you should ask us to provide further explanation.
  • You are entitled to an explanation of the figures and will have an opportunity to disagree. You are entitled to be represented in any correspondence or discussion about the figures.
  • We will offer you the chance to make a payment on account towards any additional tax we think is due from you.
  • You do not have to pay anything on account if you do not think you should. But you can avoid interest on unpaid tax mounting up by making payments on account, once it is clear that tax is recoverable.

What if we cannot agree?

  • If we are unable to reach agreement with you we will issue a Notice of Determination. We may also issue Notices of Determination if you do not give us the information we need to determine your liability. Where a Notice of Determination is necessary we will make it to the best of our judgement on the basis of all relevant facts available to us at that time.
  • Any tax charged under a Notice of Determination is liable to an interest charge covering the period from when the tax should have been paid until actual date of payment.

Do I have the right of appeal?

  • You have 30 days to appeal against any Notice of Determination which you dispute. The appeal will normally, in the first instance, be to the Special Commissioners, an independent tribunal.
  • However, we will try, whenever possible, to reach agreement with you about the amount of your SDRT liability without the need for a formal hearing.

Once you have made an appeal against a Notice of Determination, you have the right at any time during the course of negotiations to ask for your case to be heard by the Special Commissioners. Asking for this to happen will not be regarded as a lack of co-operation on your part.

We will make arrangements for your case to be heard by Special Commissioners if you have asked us to do so. But if we need more time to conclude our enquires we will ask the Commissioners for an adjournment.

You can make contact with the clerk to the Special Commissioners about having your appeal considered by them if you wish. We will give you the names and address of the Commissioners’ Clerk if you ask for it.

We will arrange for Special Commissioners to hear your appeal if there is no progress towards settling it by agreement.

We will tell you if we intend to ask the Commissioners to settle your appeal, and we will explain the figures we are putting forward. The figures we put forward to the Commissioners may have to be higher than those we suggested to you during our negotiations. This is because the figures subject to negotiation will have been “without prejudice” to the full amounts which may strictly be due in law; the Commissioners will need to consider all the facts and issues which you and we believe to be relevant.

You have the right to put forward your case to the Special Commissioners and tell them the figures you believe to be correct.

You can choose whether or not to have your case presented for you by a professional representative or – providing the Commissioners agree - by another person.

You should be aware that the Commissioners will come to their own decision about the figures that they believe are correct, based on the evidence presented to them.

You should ask us, or alternatively the Commissioner’ Clerk, if there is anything about the appeals procedure which you do not understand or feel the need to know.

Will I be charged interest and penalties?

If you have failed to account for any tax or claimed repayment of too much tax, or failed to make appropriate notices, we will ask for interest and, in appropriate cases, penalties where we believe these are due we will tell you why we think they are due.

We will take into account, when calculating any penalty, the extent of the information you provided voluntarily, whether you were helpful, and the seriousness of your errors or omissions. Further information on how settlements are negotiated and penalties calculated can be viewed on the stamp duty reserve tax pages.

You should tell us anything you think is relevant when we are working out what penalty we believe is due.

We may make penalty determinations if we believe penalties are due but you do not agree.

You have the right to appeal against any penalty determination, and you can ask for that appeal to be heard by the Special Commissioners.

What if I think I have paid too much SDRT?

A claim for repayment of SDRT which is thought to have been overpaid may be made to SDRT Operations at the following address:

Birmingham Stamp Office
9th Floor
City Centre House
30 Union Street
Birmingham
B2 4AR

For all enquiries contact:

Telephone: 0845 603 0135
Fax: 0121 633 3921 for SDRT only

How do I get help to make sure that I get it right in future?

Where we have found that your records have been inadequate or you have not operated the CREST procedures correctly we will explain what was wrong and tell you how you can put it right for the future. We will arrange a special visit if necessary.

If you are not sure exactly why your records were wrong, or if you do not know how to put things right for the future, you should ask us or your professional representative.

We will always be pleased to give advice or make recommendations to help you get things right, even if there has been no inspection.

What can be done if I am unhappy about the way the inspection is being handled?

If at any time, you believe:
- we have not followed our Code of Practice, or
- we have not been reasonable, or
- you have not been given your rights, or
- you have been treated badly in some other way during the inspection,

you can, in the first instance, contact our Office Manager at the above address.