On 1 July 2017, HMRC published revised pages in its Stamp Taxes on Shares Manual as to the meaning of “disqualifying arrangements” for the purposes of section 77 Finance Act 1986 relief (Section 77 Relief).
Section 77 Relief exempts a stamp duty charge arising where a company acquires the shares of a target company in return for the issue of shares in the acquiring company to shareholders of the target company. There are strict conditions attaching to Section 77 Relief which have included, from 29 June 2016, that there must be no “disqualifying arrangements” in place. Disqualifying arrangements are arrangements which can be reasonably assumed to have at least one purpose of securing that a particular person (or particular persons together) obtain(s) control of the acquiring company.
The updated HMRC guidance confirms that a pre-sale reorganisation taking place before a purchaser is identified will not be caught as a “disqualifying arrangement”. Nor would an IPO or an appointment of a liquidator, typically, be caught.
The updated HMRC guidance can be viewed here.