Project Blue Ltd v Revenue and Customs

For stamp duty land tax, where an original land contract and a simultaneous sub-sale are completed together, section 45(3) disregards completion of the original contract. The secondary purchaser is treated as acquiring from the original vendor, while the intermediate purchaser is not treated as acquiring a chargeable interest.

Under section 71A, alternative property finance relief requires the vendor to be the person receiving finance or a qualifying financial institution. A financial institution’s direct acquisition from a third-party vendor remains chargeable. Section 75A operates according to its statutory conditions and requires no separate proof of a tax-avoidance purpose.

Project Blue Limited acquired the former Chelsea Barracks site from the Ministry of Defence using Shari’a-compliant Ijara financing. It simultaneously contracted to sell the site to Masraf al Rayan, which granted Project Blue a long lease and options to reacquire the freehold.

The Upper Tribunal held that Project Blue owed SDLT of £38.36 million based on consideration of £959 million. Project Blue appealed, while HMRC cross-appealed on the amount of consideration, contending for approximately £1.25 billion. The central issues were the interaction of sections 45, 71A and 75A of the Finance Act 2003 and the identity of the liable purchaser.

The Court of Appeal allowed Project Blue’s appeal and dismissed HMRC’s cross-appeal. Patten LJ gave the leading judgment; Lewison and Underhill LJJ agreed.

1. Section 45(3) applies where the original contract and a secondary contract arising from a sub-sale are completed simultaneously and in connection. Completion of the original contract is disregarded for SDLT purposes. The original purchaser is therefore not treated as acquiring a chargeable interest, and the secondary purchaser’s acquisition is analysed under the deemed secondary contract. The Court applied the reasoning in