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Finance Act 2014

Part 1.Stamp Duty Reserve Tax (SDRT)

2.Paragraph 1 introduces changes to Part 4 Finance Act 1986.

3.Paragraph 2 inserts new sub-sections (4B) and (4C) into section 99 Finance Act 1986 and amends the definition of chargeable securities for SDRT purposes to exclude securities admitted to trading on a recognised growth market but not listed on any market.

4.Paragraph 3 inserts new section 99A into Finance Act 1986.

5.New section 99A(1) provides that new section 99A is for the purposes of new           sub-section (4B) of section 99.

6.New section 99A(2) provides that ‘listed’ means the same as it does in the Income Tax Acts.

7.New section 99A(3) defines what is meant by ‘recognised growth market’.

8.New section 99A(4) provides that HMRC will be responsible for recognising a market as a growth market on the basis of evidence provided by the market upon application for recognition.

9.New section 99A(5) sets out the criteria for qualification as a recognised growth market. The market must be a recognised stock exchange, where the majority of companies admitted to trading on the market have a market capitalisation of less than £170 million (new section 99A(5)(a)) and/or the market’s admission criteria require companies to demonstrate a recent record of growth in either gross revenue or employment over the three periods of account immediately preceding the date of the application (new section 99A(5)(b)).

10.New section 99A(6) defines ‘period of account’ and ‘recognised stock exchange’ for the purposes of new section 99A(5).

11.New section 99A(7) – (10) explain how a company’s market capitalisation for the purposes of new section 99A(5)(a)) is to be calculated.

12.New section 99A(11) – (12) sets out the formula by which compounded annual growth is to be demonstrated for the purposes of new section 99A(5)(b).

13.New section 99A(13) – (15) give the Treasury power, under regulations, to make provision for revocation of a market’s recognition, or to amend the rules under which HMRC can recognise a growth market.

14.New section 99A(16) provides that new section 99A is to be construed as one with the Stamp Act 1981.

15.Paragraph 4 brings into force the changes in Paragraph 2 for agreements to transfer securities that are made, or become unconditional, on or after 28 April 2014; brings into force the changes in Paragraph 3 as coming into force on 28 April 2014; and that where HMRC has formally recognised a market as a growth market before that date, the recognition will have effect from 28 April 2014.

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