Project Blue SDLT avoidance scheme closed down

A tax tribunal has ruled against a Stamp Duty Land Tax (SDLT) avoidance scheme which could have cost £135m in tax.

The scheme related to the sale of the Chelsea Barracks in London by the Ministry of Defence to a consortium known as Project Blue Ltd in January 2008. The company was owned jointly by the Qatari government and CPC Group, and is now solely owned by the Qatari Government.

As result of the tribunal's ruling, Project Blue now faces a bigger tax bill than it would have faced, had it not entered into the arrangement.

The SDLT sub-sale and alternative finance scheme had been notified by Clifford Chance under the Disclosure of Tax Avoidance Schemes (DOTAS) regulations, and attempted to eliminate all of the SDLT due on the purchase of Chelsea Barracks.

The First Tier Tribunal (FTT) ruled that £50m was owed in SDLT and that without the scheme the purchasers would have only paid £38m. The judgment affects 24 similar commercial cases and around 900 mass market residential cases, protecting £85m in tax.

Project Blue argued that the transactions had been carried out for commercial reasons and not to avoid tax. However, the tribunal ruled that the company had failed 'to put forward evidence of all the factors that may have been taken into account' and failed to establish that tax avoidance was not a factor in their decision to proceed.

HMRC said this was an important case as it is the first to test a targeted anti-avoidance rule in the SDLT legislation.

David Gauke, Treasury secretary, said: 'The message is clear that entering into a tax avoidance scheme can cost more than paying the original tax bill. Avoidance is complex, expensive and self defeating.'

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

View profile and articles

Be the first to vote

Rate this article

Related Articles