Wrong proportion

Stamp duty reserve tax due on a redemption in specie

A pension fund trustee redeemed in specie all the units it held in the Henderson UK Enhanced Equity Trust. Its interest in the scheme represented 27.41% of its property but the securities received on redemption represented an interest of 28.68% of the property. The unit holder had therefore received an over-allocation of securities of 1.27% on redemption.

A redemption in specie occurs when a holder surrenders his units in the scheme to the manager of the scheme and instead of receiving a cash payment equivalent to the value of the units receives a distribution of securities and cash from the scheme of equivalent value. An issue arose over the stamp duty reserve tax due on the redemption. Henderson considered that FA 1999 Sch 19 para 7 provided an exclusion from SDRT on a redemption in specie to the extent that there was...