§ Mr.Traceyasked the Chancellor of the Exchequer if he will set out the view which the Inland Revenue proposes to adopt on the payment by a company of stamp duty on a purchase of its own shares.
§ Mr.MooreThe Companies Act 1981 enables companies to purchase their own shares. A specific exemption from ad valorem stamp duty was not provided although it was intended that section 52 of the Act (Disclosure of Particulars of Purchase and Authorised Contracts) should effectively provide for this. Doubts have arisen as to whether section 52 achieved this objective.
Ad valorem duty is payable on any conveyance or transfer on sale, and section 54 of the Stamp Act 1891 provides that the expression "conveyance on sale" includes every instrument whereby any property sold is transferred or vested in the purchaser. The Board of Inland Revenue is advised that although the matter is not free from doubt, there are grounds for holding that this section does not apply when a company purchases its own shares. This is the view that the board proposes to adopt. A secretary or registrar of a company may accordingly amend the register without requiring that any delivery statement is stamped with ad valorem duty.
The Companies Act 1981 provides an exemption from capital duty for future re-issues of the repurchased shares.