This section applies to managers.
Certain transactions in units can result in stamp duty reserve tax being paid out of the scheme property of the AUT. Accordingly, with a view to protecting investors from a resulting diminution in the value of their units, and in accordance with Principle 6 (customers' interests) that a firm must pay due regard to the interests of its customers and treat them fairly, a manager is permitted to require the payment of an SDRT provision as an addition to the price of units when they are issued or sold, and as a deduction when they are cancelled (other than certain in specie cancellations) or redeemed.
Any SDRT provision paid or received by deduction is for the account of the AUT. However, there are provisions to prevent an SDRT provision being imposed twice, both on the issue and subsequent sale of a unit, or on the redemption and subsequent cancellation of a unit.1
For the purpose of (1) and (2) it does not matter whether the cancellation is under CIS 15.3 (Issues and cancellations) or under CIS 15.5 (Issues and cancellations through the manager and in specie cancellations).
CIS 15.6.3 R(3) (SDRT provision) requires an SDRT provision to be imposed only in a manner that, so far as practicable, is fair to all holders and potential holders. However there are exceptions to this in respect of large deals. In addition, certain transactions (such as transactions in units within an individual pension account) are specifically excluded from a charge to stamp duty reserve tax.1
The manager has the power to require either or both of:
the deduction of an SDRT provision in respect of the redemption, or cancellation of units, other than a cancellation of units under CIS 15.5.4 R (In specie cancellation) resulting in a transfer of property that is such part of each description of asset in the scheme property as is proportionate to, or as nearly as practicable proportionate to, the Unitholder's share in the scheme property.
is not unfair
If the manager receives an SDRT provision in respect of any unit sold or to be sold by it, it must immediately upon receipt of that SDRT provision pay it to the trustee to become part of the scheme property of the AUT, except to the extent that it has already been, or will be, paid by the manager to the trustee on the issue of that unit.
If the manager deducts an SDRT provision from the proceeds of a unit it redeemed, it must immediately pay it to the trustee to become part of the scheme property except to the extent that it already has been, or will be, deducted from the payment by the trustee to the manager on cancellation of that unit.