Section 75A SDLT: The Anti-Avoidance Rule That Catches More Than Tax Schemes

A development site rarely changes hands in one clean step. An option is granted, then exercised; a contract is assigned before completion; a company acquiring land is itself restructured along the way. Each step can look unremarkable on its own. Section 75A of the Finance Act 2003 looks at the whole sequence instead, and if the SDLT actually paid across it comes out lower than a single direct transfer would have cost, it can tax the lot as if that direct transfer had happened — with no need to show anyone was trying to avoid tax.

What Section 75A actually does

Sections 75A to 75C were inserted into the Finance Act 2003 to close down a wave of SDLT sub-sale and "resting on contract" schemes, and they work by comparison rather than by prohibition. Where a series of transactions is "involved in connection with" the disposal of a chargeable interest by one person (V) and its acquisition by another (P), and the sum of SDLT actually paid on those transactions is less than the SDLT that would have been due on a notional land transaction effecting the acquisition directly, HMRC can disregard the actual transactions and charge SDLT on that notional transaction instead. The notional transaction is treated as taking the highest consideration passing at any stage, or market value if that is higher, with credit given for SDLT already paid so the same value isn't taxed twice over.

There's no motive test

The feature that makes Section 75A different from the General Anti-Abuse Rule, or from a targeted anti-avoidance rule with a "main purpose" filter, is that it doesn't ask why the transactions were structured the way they were. It asks only whether the tax outcome across the series came out lower than the direct route. The Supreme Court confirmed just how wide that reach is in Project Blue Ltd v HMRC [2018] UKSC 55, a case involving Islamic finance arrangements used to fund the Chelsea Barracks site, holding that Section 75A can apply to steps that were commercially driven rather than tax-motivated. For a development structure built around genuine legal or funding requirements — not a scheme designed to save SDLT — that's the point worth sitting with: intention isn't a defence.

The structures that tend to walk into it

In practice, the transactions most likely to trigger a Section 75A analysis on a development deal are option arrangements combined with a later assignment, sub-sale or "back-to-back" contracts where the original buyer never takes legal title before selling on, and group reorganisations carried out partway through a land acquisition. None of these are unusual or improper in themselves — options and conditional contracts are standard tools for de-risking a site before planning is secured, and corporate restructuring happens for reasons that have nothing to do with SDLT. The risk sits specifically in the SDLT arithmetic across the whole sequence, not in the commercial logic of any individual step.

The excluded transactions carve-out

Section 75A doesn't reach every multi-step deal. A list of excluded transactions sits alongside the main rule, broadly covering steps that already attract their own specific SDLT relief — group relief, reconstruction and acquisition relief among them — and ordinary linked transactions that don't themselves produce a reduced tax outcome. Those exclusions are drawn narrowly, and a transaction doesn't get the benefit of them simply because it looks routine viewed on its own; the comparison in Section 75A(1) is between the tax actually paid across the whole series and the tax that would have applied to a single notional transaction, and that comparison is what decides whether the rule bites.

What this means for a development structure

For anyone assembling a site through options, conditional contracts, or a chain of related-party transfers, the practical takeaway is that the SDLT position needs testing against Section 75A at the point the structure is designed, not once it's already been implemented. That means mapping out every step in the sequence, working out what SDLT is actually payable at each stage, and comparing that total to what a single direct acquisition would have cost. Where the structure is genuinely driven by commercial or legal necessity rather than SDLT saving, that's worth documenting contemporaneously — not because motive is a defence to Section 75A itself, but because it supports the wider analysis of what the transactions actually achieved and how the notional transaction, if the rule did apply, ought to be valued.

Common questions

Does Section 75A only apply where there's a tax avoidance motive?

No. Unlike the General Anti-Abuse Rule, Section 75A contains no test of intention or purpose. It is an entirely objective comparison: if the total SDLT actually paid across a series of connected transactions is less than the SDLT that would have been due on a single, direct notional transaction between the original seller and the ultimate buyer, the rule can apply, regardless of why the transactions were structured that way. The Supreme Court confirmed this wide, purpose-free reading in Project Blue Ltd v HMRC in 2018, which is why genuinely commercial multi-step deals can be caught alongside deliberate avoidance schemes.

What is the notional land transaction under Section 75A?

Where Section 75A applies, HMRC disregards the actual chargeable transactions that took place and instead charges SDLT as if there had been a single land transaction directly between the original vendor and the eventual purchaser. The chargeable consideration for that notional transaction is generally the largest amount of consideration given at any stage of the actual transactions, or the market value of the subject-matter if that is higher, with credit given for SDLT already paid on the component transactions so the same value isn't taxed twice.

Are ordinary linked transactions caught by Section 75A?

Not automatically. Section 75A carries a list of excluded transactions, broadly covering standard transactions that already attract specific SDLT treatment, such as those qualifying for group relief, reconstruction or acquisition relief, or transactions that are simply linked transactions under the ordinary SDLT rules without any additional step reducing the tax outcome. The exclusions are narrowly drawn, though, and a transaction doesn't escape the rule just because each individual step looks unremarkable in isolation; the test looks at the overall tax result of the series.

Can advance clearance be obtained from HMRC before completing a multi-step property deal?

There's no statutory clearance procedure specific to Section 75A in the way some other tax rules offer a formal ruling. HMRC's non-statutory clearance service can, in limited circumstances, be asked to comment on genuine points of uncertainty, but it isn't designed for routine pre-clearance of commercial structures and HMRC can decline to give a view. In practice, structures involving more than one step in a property acquisition need to be tested against Section 75A and the relevant case law at the planning stage, before contracts are exchanged, rather than relying on clearance afterwards.

This article is general information, not personal tax or legal advice, and the rules referred to can change. Your own position depends on facts we cannot see from here — please take advice before acting on anything above.

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