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Henderson loses HMRC tax battle over stamp duty reserve bill

Stamp duty reserve tax fight plays out in the courts

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Henderson has lost an appeal over a £1.65m tax bill incurred through an in specie redemption in a unit trust scheme.

The fund manager had attempted to claim back a stamp duty reserve tax charge from HM Revenue & Customs, but was unsuccessful.

The case involves a redemption in specie of all the units held in the Henderson UK Enhanced Equity Trust by a pension fund trustee.

HMRC argued that relief on Schedule 19 stamp duty reserve tax – which applies to collective investment schemes such as unit trusts when investors sell their units and they are re-issued to new investors – applies only when the unit holder receives an allocation of assets in the trust proportionate to their share.

The pension fund trustee’s interest totalled 27.41 per cent of the trust’s value. Securities received in most cases by the trustee on redemption represented an interest of 28.68 per cent, an over-allocation of securities and a corresponding under-allocation of cash.

Henderson said more cash might have been allocated to get closer to 27.41 per cent but the allocation was “very complicated” and “quite uncommon” due to the proportion of non-transferable positions.

In a judgment released this week, the Upper Tribunal agreed with HMRC and dismissed Henderson’s appeal.

A Henderson spokesman did not respond to a request for comment.

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