STSM022200 | Scope of stamp duty on shares: stamp duty: adjudication, stamps and reliefs: mergers of AUTs

The transfer of property as a consequence of the merger of Authorised Unit Trusts (AUTs) is, subject to certain conditions, relieved from Stamp Duty by the provisions of section 95 FA1997.

The conditions

These are detailed in section 95(2) FA1997:

1. the transfer forms part of an arrangement under which the whole of the available property of the target trust is transferred to the trustees of the acquiring trust

2. under the arrangement all the units in the target trust are extinguished

3. the consideration under the arrangement consists of or includes the issue of units (the "consideration units") in the acquiring trust to the persons who held the extinguished units

4. the consideration units are issued to those persons in proportion to their holdings of the extinguished units

5. the consideration under the arrangement does not include anything else, other than the assumption or discharge by the trustees of the acquiring trust of liabilities of the trustees of the target trust

How to claim the relief

Adjudication under section 12 SA1891 is required - see STSM022020 for more information.

Collective Investment Scheme mergers – general

HM Revenue and Customs (HMRC) accept that following the principles established in the case of Save and Prosper Securities Ltd v CIR (Sp.C 251), an amalgamation, partition or reconstruction of Authorised Unit Trusts (AUTs) or Open-Ended Investment Companies (OEICs) (or sub-funds of an AUT or OEIC) that takes its effect under a scheme of arrangement will not be regarded as a transfer on sale and therefore no charge to Stamp Duty will arise. See STSM107090 for more information.