The recommendations would reform stamp duty on paper documents, such as stock transfer forms, putting the tax on a modern digital footing by 'retiring' the machines which impress a physical stamp on documents,
He said he will "consider the recommendations carefully" and "weigh up the benefits in the wider context of other ongoing reforms". However, the letter stops short of confirming that the government will introduce the changes and gives no indication of any possible timescale.
John Christian, a tax expert at Pinsent Masons, the law firm behind Out-Law.com said: "It sounds as if, although the chancellor agrees that these reforms make sense, they are not going to be a high priority and may struggle to make it into a finance bill anytime soon".
"This is disappointing as moving to a digital system for stamp duty payment should not be controversial and would be a positive message from government about supporting the OTS's role in identifying areas where the UK tax system can be simplified and modernised. As it is, cumbersome work-arounds will continue to have to be employed on some corporate transactions to get commercial deals done." he said.
The recommendations for reform were made in a paper published by the OTS in July. The proposals included allowing for the digital collection of stamp duty and introducing the ability for company shareholder registers to be updated immediately on receipt of a unique transaction reference number.
Currently a stampable document must be posted to the Stamp Office in Birmingham, with a cheque or bank transfer for the duty, so that a physical stamp can be impressed on it. The stamped document is returned by post and then sent to the relevant company registrar. Legal title to shares in a UK company does not pass until the register of members is updated, but the registrar of a company cannot lawfully update the register unless the transfer document has been stamped. This causes problems in relation to time sensitive transactions.
The changes proposed by the OTS would allow for company shareholder registers to be written up following submission of an electronic return rather than the actual payment of stamp duty, which would be required to follow.
The OTS also proposed that group relief and reconstruction relief rules be introduced into stamp duty reserve tax (SDRT). SDRT applies wherever there is an agreement to transfer shares. Paying stamp duty on an document of transfer discharges an SDRT liability. SDRT is paid mainly on electronic transfers of shares, where there is no physical instrument of transfer, such as within the CREST system. As SDRT does not include a group relief or a reconstruction relief, if these reliefs would be available it is currently necessary to create a physical instrument of transfer simply to claim these reliefs from stamp duty. The OTS also proposed reforming the system for claiming stamp duty reliefs.
The chancellor said in relation to these proposals "I see value in my officials exploring them further".
Stamp duty land tax (SDLT) was introduced in 2003 to replace the charge to stamp duty in relation to UK land. Since April 2015, transfers of land in Scotland have been subject to land and buildings transaction tax. From April 2018 land transaction tax will replace SDLT for transfers of land in Wales.