UK: Overpaid stamp duty reserve tax can be recovered | KPMG | GLOBAL
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UK: Overpaid stamp duty reserve tax can be recovered, holds High Court

UK: Overpaid stamp duty reserve tax can be recovered

The High Court has ruled that the claimant can recover overpaid stamp duty reserve tax on share issues made between 2000 and 2003.


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In 2010, the High Court granted a group litigation order (GLO) in respect of stamp duty reserve tax (SDRT) reclaims made by a number of persons. The claims are for restitution and/or damages against HMRC regarding payments of higher (1.5%) rate SDRT on the transfer or issue of shares to providers of depositary receipt and clearance service arrangements. The payments were made before having been declared unenforceable under EU law. This case is the test claim for the purposes of resolving some of the remaining issues in the Stamp Taxes GLO.

The High Court held that tax payments made before 8 September 2003 could be recovered. HMRC were unjustly enriched by the claimant’s mistake in paying the tax, but tax payments made on or after 8 September 2003 were time barred.

The significance of that date relates to a change of UK law that took effect then. That change of law removed an exception to the standard six-year limitation period that applied to mistake-based restitution claims. It means that tax reclaims based on a mistake cannot be brought more than six years after the date of payment.

The High Court held that the change of law was retrospective and, as such, infringed EU law. The remedy required to avoid the infringement was to declare ineffective the change of law as it relates to rights that accrued before the change of law. The accrual of rights to recover the tax stem from the payments made mistakenly under the unlawfully levied tax. So the tax payments made by the company before 8 September 2003 were recoverable; those made by the company on or after that date were not as they were time-barred.

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