HMRC is planning to improve the Stamp Duty Reserve Tax (SDRT) assessment system, CREST, to ensure that gross transactions in stocks and shares are sent to a central point for reporting and assessment from June next year.

Following a consultation exercise, the department has asked the current CREST operators, Euroclear UK & Ireland Ltd (EUI), to develop a new service, saying that there is an increasing trend for gross transactions in securities to be aggregated or netted off outside of CREST before settlement, which means that EUI cannot assess the gross transactions as legislation requires.

Scheduled to go live in June 2014, the new service will allow financial businesses that are accountable for SDRT to report their gross transactions separately to a central point for SDRT assessment only, whilst ensuring that those who wish to can still settle transactions on an aggregated or net basis in CREST. Businesses that settle their transactions in CREST on a normal gross basis, or use the netting functionality within CREST, will not be affected.

The new assessment service will be operated separately, but will closely follow the established stamp duty market practice in CREST. Where an aggregated or net transaction is input to the system as a delivery settlement instruction, the transaction will need to be flagged with a new 'net' stamp flag.

Where a 'net' stamp flag is entered, the transaction will settle under normal CREST settlement discipline, but will not be assessed for stamp duty. The underlying gross transactions will then need to be reported separately to the new stamp duty assessment service. Compatible messaging formats will likely be used to send gross transactions over a secure internet connection.