SDLTM09160 | How to identify P where there are multiple candidates: Section 75A (1)(a)

(This page was introduced on 15 January 2020 and updated on 14 May 2021)

Where there are multiple disposals and acquisitions of a chargeable interest within the scheme transactions, there may be more than one party which acquires the chargeable interest disposed of by V, or who acquires an interest derived from it.

The legislation itself does not provide an answer as to who is P in this case. In Project Blue Ltd v HMRC the court dismissed adopting a sequential approach to identify P, Lord Hodge stated:

“That approach appears to me to be inconsistent with the purpose of section 75A, which is to prevent a tax loss which otherwise would occur because of the totality of the connected transactions which have taken place in the real world.”

Instead, the court adopted a purposive approach to the matter. Looking at the intention behind Section 75A, the Court identified the person who benefitted from the adoption of the scheme transactions and which exploited a loophole in the statutory provisions, concluding that that person was P.

Consequently, to identify P where there are multiple candidates, you must consider all of the scheme transactions and P will be the person who has obtained the tax benefit or who would have been liable to the tax had the scheme transactions not been pursued.