John is a partner working within the Tax and Private Client teams at Schofield Sweeney.
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Stamp duty relief applications for share for share exchange transactions, commonly made in reorganisations when a new holding company is placed on top of a corporate group, are no longer a procedural formality.
- The stamp office are now far more aggressive in analysing stamp duty share for share exchange relief applications;
- Applicants are frequently being made to wait for a long period of time to receive an adjudication often punctuated with requests for additional documentation/ information;
- A particular issue has arisen with the mirroring of shares in the exchange. Whilst the stamp office have denied a change in policy, a point which they are now raising is that as well as shares being mirrored in the share exchange, certain types of debt in target must also be mirrored in the acquiring company. In practice this impacts on a significant number of reorganisations and the need to restructure, replicate funded debt in the new Topco and/ or stomach a stamp duty liability must be considered.
Stamp duty share for share exchange relief applications should no longer universally be viewed as straightforward and “in the bag”.
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