On 25 March 2020, HMRC announced that stock transfer forms and other transfer instruments should no longer be posted to the HMRC Stamp Office, due to COVID-19 measures. Effective immediately, all documents for stamping should be submitted electronically, together with scans of the instruments to be stamped and details of the transaction and electronic payment. This includes stock transfer forms, Form SH03s in respect of share buybacks, and instruments transferring beneficial interests. Further clarification may follow on adjudications for relief (e.g. group relief).
Applications which have already been posted to HMRC, but have not yet been returned stamped, should be resubmitted electronically. Where documents are not resubmitted, or payments are made by cheque rather than electronically, the documents will not be processed and the cheques will not be presented until after COVID-19 restrictions are lifted.
HMRC will respond to applications with an electronic copy of a confirmation letter in respect of the stamping. The letter will provide comfort that HMRC will not seek penalties for registering share transfers without physically stamped documents, and can also be provided to Companies House where applicable. We understand that once emergency measures are lifted, and HMRC returns to business as usual, parties will be able to post the original documents to the Stamp Office for physical stamping. HMRC will publish revised guidance once COVID-19 measures end.
The 30 day deadline for submission and payment remains. However, for instruments which are executed outside the United Kingdom, the relevant legislation still provides that penalties for late stamping only arise 30 days after the instrument is first received in the UK. We nevertheless recommend that documents are submitted for stamping as soon as possible, and even (as is now possible) before the documents are physically received in the UK. Interest continues to run from the date of execution, regardless of where the instrument is executed. HMRC now indicate that most stock transfer forms will be processed within 15 working days, up from 10 working days under previous versions of the guidance, but we expect that turnaround times may improve in light of the reduced logistical aspects of the revised process.
In all cases where documents have been executed and were to be retained outside the UK, for example where there are contractual obligations to do so, parties should take advice before bringing the documents into the UK.
In relation to certain other tax measures, the government has indicated that HMRC may waive interest and penalties where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19. However, given the significant relaxations to stamp duty application procedures described above, we expect that HMRC will be reluctant to waive interest or penalties in respect of late submission for stamping, except in the most exceptional circumstances. As a result, we recommend electronic resubmission together with electronic payment for all stamp duty applications, as soon as possible after documents are signed.
At least while COVID-19 measures are in place, HMRC will accept stock transfer forms which have been electronically signed. As a number of regions are now in “lock down”, and difficulties may be encountered in posting documents, electronic signing should be considered for any documents which have not yet been executed.
These emergency measures are welcome in view of the challenges many have faced recently when seeking to arrange for stock transfer forms and other instruments to be stamped by HMRC so that company books can be updated, interest and penalties avoided and contractual and other legal obligations met. Taxpayers will need to be aware of the new procedures that now apply during the emergency period.