STSM142080 | Stamp duty and SDRT Administration: SDRT Administration: error dealing

Error Dealing

Error dealing refers to situations where chargeable securities are purchased “by mistake”.

Where the purchaser has authority to enter into the transaction, then this will normally still represent a valid purchase in respect of an unconditional agreement to transfer those securities, giving rise to a Stamp Duty Reserve Tax (SDRT) charge.

STSM142090 provides guidance on HMRC’s approach where transactions, including those resulting from error dealing, are cancelled in CREST prior to settlement.

In addition, HMRC would not normally seek an SDRT charge in cases where a transfer is cancelled or reversed before or after settlement, as a consequence of a broker dealing in securities where the client has only authorised the broker to trade shares in ABC plc, but the broker instead, in error, entered into a transaction involving XYZ plc shares. In such cases, the broker has acted outside of their authority, and so the transfer of the securities has not resulted from a valid, legally enforceable, unconditional agreement to transfer the XYZ plc shares.