Broad, Inflexible and Redundant?: Fixing the Anti-Avoidance Rule in Section 75A Finance Act 2003
(2015) 4 Oxford University Undergraduate Law Journal 96-111
Posted: 20 May 2016 Last revised: 31 May 2017
Date Written: September 1, 2015
Sections 75A- 75C of the Finance Act 2003 (‘the Sections’) were enacted with the intention of countering schemes that have the effect of reducing Stamp Duty Land Tax (‘SDLT’) liability. These sections were subjected to criticism right from the start, with practitioners noting its exceptionally broad scope and some going so far as to call it ‘fundamentally deficient’ and ‘almost unworkable in practice’. The recent decisions of the First-Tier Tribunal in Project Blue Ltd v Revenue and Customs Commissioners (‘Project Blue FTT’) and its subsequent appeal to the Upper Tribunal in Project Blue Ltd v Revenue and Customs Commissioners (‘Project Blue UT’) have since provided some clarification about the interpretation of the scope of the Sections.
The article will focus on the three main flaws of the Sections, as elucidated from the interpretation of the court in Project Blue: 1) the lack of discretion for HMRC to determine the cases to apply the Section to; 2) their excessively broad scope; and 3) the lack of flexibility in determining the consideration paid for the land. The article will then concentrate on four potential solutions to the problem of the excessively broad scope of the Sections. It will be argued that the scope of the Sections could be narrowed by: 1) a greater exercise of the powers of the Treasury to widen the scope of exceptions; 2) restoring the power of discretion to HMRC on when to apply the Sections (preferably by amending the statute based on the current General Anti-Avoidance Rule (‘GAAR’)); 3) refining the requisite connection test and basing it on whether the transaction is in substance one of the disposal and acquisition of land; or 4) accepting motive as a regulatory mechanism.
Keywords: Tax Law, Stamp Duty Land Tax, Anti-Avoidance
Suggested Citation: Suggested Citation