When the Supreme Court handed down Project Blue Ltd v Commissioners for HMRC [2018] UKSC 30 on 13 June 2018, it settled a £50 million question about the former Chelsea Barracks — and, in doing so, fixed the meaning of the most powerful anti-avoidance rule in the stamp duty code. The headline for anyone who deals with property tax: section 75A of the Finance Act 2003 works mechanically. It bites whenever its conditions are met, whatever the parties intended.
That single point — that no motive to avoid tax needs to be shown — is why the case is still cited in almost every Stamp Duty Land Tax (SDLT) dispute involving more than one transaction. Here is what the court actually decided, in plain terms.
The deal behind the case
In 2007 Project Blue Ltd (PBL), a company backed by Qatari Diar (owned by the Qatari government), won a sealed-bid tender to buy the former Chelsea Barracks on Chelsea Bridge Road, London, from the Ministry of Defence. The agreed price was £959 million, with contracts exchanged on 5 April 2007.
PBL needed Sharia-compliant finance, which cannot involve paying or receiving interest. It used an Ijara arrangement with Masraf al Rayan (MAR), a Qatari bank. On completion — 31 January 2008 — three steps happened together:
| Step | What happened | Stated consideration |
|---|---|---|
| 1 | The Ministry of Defence conveyed the barracks to PBL | £959m |
| 2 | PBL sold the freehold on to MAR | £1.25bn (US$2,467,875,000) |
| 3 | MAR leased the site back to PBL, with an option for PBL to buy it back | Ijara rent + option |
On paper, the group of transactions was structured to produce no SDLT at all.
The two reliefs that were meant to cancel the tax
Two separate reliefs were stacked:
- Sub-sale relief (FA 2003, section 45). Because PBL had contracted to buy and then sold on to MAR before completing, section 45 treated the deal as a "transfer of rights". The tail of section 45(3) required the MoD-to-PBL sale to be disregarded, with tax instead falling on a notional contract. As the court put it, giving effect to that disregard "meant that the vendor of the barracks was the MoD, and not PBL."
- Alternative property finance relief (FA 2003, section 71A). Section 71A recognises the three steps of an Ijara — the institution buys, leases back, and grants a buy-back right — and exempts the institution's purchase (the "first transaction"). MAR's SDLT return on the £1.25 billion claimed this exemption.
Run together, PBL's analysis was that the MoD sale was disregarded and MAR's acquisition was exempt, so no one paid SDLT on a £959 million site. HMRC assessed the tax at £50 million, and the fight reached the Supreme Court.
What section 75A actually says
Section 75A is the "notional transaction" backstop. Stripped to its structure, it applies where:
- one person (V) disposes of a chargeable interest and another (P) acquires it, or an interest deriving from it;
- a number of transactions ("the scheme transactions") are involved — the statute expressly lists "a sub-sale to a third person" as an example; and
- the SDLT paid across those scheme transactions is less than the SDLT that would be due on a single notional transaction moving V's interest to P.
Where it applies, the scheme transactions are disregarded and SDLT is charged on that notional transaction instead. The chargeable consideration is set by section 75A(5) at "the largest amount ... given by or on behalf of any one person" for the scheme transactions — here, MAR's £1.25 billion.
Crucially, section 75A(7) contains a carve-out: the rule does not apply where the SDLT shortfall arises only by reason of the alternative-finance reliefs (sections 71A–73) or Schedule 9. PBL's case leaned heavily on that escape hatch.
The ruling: mechanics beat motive
The Supreme Court, by a majority of four to one, held that the scheme did not work and PBL was liable for the £50 million.
On motive. Lord Hodge, giving the lead judgment (with Lady Hale, Lord Hughes and Lord Lloyd-Jones agreeing), held that section 75A carries no purpose test. The section "says nothing as to the motives of the parties," he noted; "there is nothing in the body of the section which expressly or inferentially refers to motivation." It applies wherever a reduced or nil SDLT liability "resulted from the series of transactions which the parties put in place, whatever their motive for transacting in that manner." A buyer with entirely commercial reasons is caught just as squarely as an aggressive planner.
On the reliefs. The escape in section 75A(7) did not save the scheme. Because section 45 had already recast the MoD as the notional vendor, the section 71A exemption — which exempts the institution's purchase only where it buys from the finance customer — no longer fitted the facts. The shortfall therefore did not arise only by reason of the alternative-finance relief, and the notional transaction under section 75A restored the charge: 4% of £1.25 billion, the top SDLT rate in force on 31 January 2008, came to £50 million.
The dissent. Lord Briggs would have dismissed HMRC's appeal, taking the view that the Court of Appeal's narrower reading was correct. His dissent is a reminder that the outer edges of section 75A remain genuinely arguable — but the majority's mechanical reading is the law.
| Question | The court's answer |
|---|---|
| Does section 75A need a tax-avoidance motive? | No — it is mechanical |
| Can sections 45 and 71A be stacked down to nil? | Not here — the reliefs did not fit together |
| What sets the notional consideration? | The largest sum given: £1.25bn |
| SDLT due | £50m (4%, 2008 rates) |
Why a billion-pound case matters to ordinary buyers
Chelsea Barracks was a development deal, not a home purchase. But Project Blue is cited far below that rarefied level, because section 75A sits behind everyday conveyancing structures — sub-sales, assignments of contracts and finance leasebacks — wherever a chain of transactions ends up cheaper than a straight purchase would have been. The lesson the case teaches is that HMRC does not have to prove you were trying to avoid tax; it only has to show the arithmetic in section 75A(1)(c) is satisfied.
That arithmetic bites hardest at the top of the market, where multi-step structures are most common. Across England and Wales in 2025, 137,645 standard-priced homes sold for more than £500,000 and 21,974 for more than £1 million — 18.1% and 2.9% of 759,637 arm's-length dwelling sales (HM Land Registry Price Paid Data, fetched 3 August 2026) — the band where corporate ownership, sub-sales and reliefs tend to cluster.
For the mechanics of how the notional transaction is priced once section 75A engages, see our companion guide on the section 75A notional transaction, with worked numbers. For the everyday sub-sale rules that Project Blue turned on, see resting on contract and sub-sale anti-avoidance. And for how the courts read "deliberate" behaviour in a related SDLT context, see our summary of Tooth v HMRC and the discovery-assessment deliberate test.
You can also see what ordinary homes actually cost — mortgage, council tax, energy and stamp duty combined — for any address, including prime central London around the old barracks at SW1W. Browse more of these explainers in the Cost Intelligence category.
This is general information about a public court judgment, not tax or legal advice. Section 75A is highly fact-sensitive, and the outcome turns on the precise structure of each transaction. Speak to a qualified adviser before acting.