SDLTM09090 | Intention and purpose of the legislation

(This page was introduced on 15 January 2020)

Section 75A was introduced in 2006 in response to schemes and arrangements which sought to reduce or eliminate a charge to tax in a way which was contrary to the intention of the SDLT legislation.

Section 75A operates by applying to transactions which meet the conditions and rules set out in its provisions. This differs from other targeted tax avoidance legislation in that Section 75A does not contain a tax avoidance “main purpose” test.

The operation of Section 75A was articulated by Lord Hodge in the Supreme Court Judgment in Project Blue Ltd v Commissioners for Her Majesty’s Revenue and Customs [2018] UKSC 30 where he states:

“it is sufficient for the operation of [Section 75A] that tax avoidance, in the sense of a reduced liability or no liability to SDLT, resulted from the series of transactions which the parties put in place, whatever their motive for transacting in that manner”

Section 75A is an objective test which sets out conditions for the legislation to apply. None of these conditions require there to be a tax avoidance motive by or on behalf of any of the persons who are party to the property transaction or arrangements.

It is sufficient for the operation of Section 75A that a tax saving results from the series of transactions which the parties put in place.