In December 2016, the Office of Tax Simplification ("OTS") commenced a review of Stamp Duty on paper transactions ("SD") to develop recommendations to simplify it from both a technical and administrative standpoint. The review was started by a request for comments generally. Having concluded this initial phase, it published a progress report on 2 March 2017, setting out what have been identified as the main issues. The report also proposes some potential solutions as well as posing a number of questions to find out what other issues, solutions and implications it should consider.
The OTS notes that, from its initial conversations, no one has suggested any change to the fundamental requirement that SD be paid to enable a transfer of legal ownership to be registered; this being the key feature which means that SD is both difficult to avoid and inexpensive to collect.
However, it notes that everything it has heard so far has confirmed its working assumption that it should try effectively to abolish paper SD. It is therefore proceeding on the basis that it needs to develop a modern digitised replacement system. In order to explore the options, it has divided the report into two parts:
- part 1, looking at how a digital SD approach could work, and
- part 2, which sets out the key technical questions that have arisen in the course of the OTS's work so far, including:
- whether instruments or "agreements to transfer" should trigger the tax; and
- in relation to exemptions and reliefs.
In particular, the OTS is asking for help in three ways:
- evidence of how the areas identified cause difficulties and complexities in practice and ideas about how to improve things,
- identifying any areas for simplification that have been missed, and
- evidence around the administrative costs of the current system and savings that might arise from implementing the different options identified.
To read the report in full and the questions being posed, click here. The OTS is asking for contributions (either in response to the questions it is asking or more generally), to be received by 31 May 2017. The OTS aims to develop recommendations for simplification during phase 2 of the review which will report in summer 2017.