Hive-out and Sale of Transferor: Yellow Acorn’s Acquisition of Gold Nutmeg Shares

When section 75A is unlikely to apply to a pre-sale property hive-out

HMRC’s example shows that section 75A SDLT anti-avoidance rules will not automatically apply where a company transfers out unwanted properties before its shares are sold. On the facts given, the relevant land transaction is the transfer of those properties to the parent company, while the later share sale is treated as a separate corporate step that does not affect that land transfer.

• Section 75A looks at whether land is disposed of and acquired through connected transactions in a way that reduces SDLT below the overall economic effect.
• In HMRC’s example, the target company transfers 10 unwanted properties to its parent, then the buyer acquires the shares in the target company, which keeps only 5 properties.
• HMRC says section 75A does not apply because the buyer does not acquire the 10 transferred properties; it acquires shares instead.
• The later share sale is not treated as being involved in connection with the transfer of the 10 properties, because it has no impact on that land transaction.
• The same approach should also apply if the hive-out is made for consideration and SDLT group relief is claimed on the intra-group transfer.
• The result is fact-specific, so a different outcome may arise if the share sale and land transfer are more closely linked in legal or economic effect.

Scroll down for the full analysis.

When section 75A is unlikely to apply: hive-out of unwanted properties before a share sale

This page explains an HMRC manual example about a common transaction structure: a buyer wants to buy a company, but only if that company keeps certain properties and transfers out the rest first. The example is important because it shows a situation where HMRC says the SDLT anti-avoidance rule in section 75A does not apply, based on the facts given.

What this rule is about

Section 75A FA 2003 is an anti-avoidance rule for SDLT. Broadly, it can apply where a land interest is disposed of by one person and acquired by another person through a series of connected transactions, so that the SDLT result does not reflect the overall economic effect.

The rule is not triggered just because there are several steps in a wider commercial deal. There must be the right link between the land disposal, the land acquisition, and the connected transactions.

This HMRC example deals with a buyer who wants to acquire a company holding some properties, but not all of them. Before the share sale, the target company transfers out the unwanted properties to its parent company. The question is whether that pre-sale transfer of land, taken together with the later share sale, could be treated as part of a section 75A arrangement.

What the official source says

HMRC’s example says section 75A does not apply to the distribution of the unwanted properties on the facts stated.

The facts are:

• Yellow Acorn Limited wants to buy all the shares in Gold Nutmeg Limited.
• Gold Nutmeg Limited owns 15 properties.
• The buyer only wants Gold Nutmeg Limited to retain 5 specific properties.
• Gold Nutmeg Limited distributes the other 10 properties to its parent company.
• After that, Yellow Acorn Limited buys all the shares in Gold Nutmeg Limited and pays stamp duty on the share acquisition.

HMRC’s reasoning is that section 75A applies where one person, described in the legislation as V, disposes of a chargeable interest and another person, P, acquires that interest or a chargeable interest derived from it. In this example, the only chargeable interests acquired are the 10 properties transferred to the parent company.

HMRC then says the later purchase of the shares in Gold Nutmeg Limited is not “involved in connection with” the disposal and acquisition of those 10 properties, because the share sale has no impact on those land transactions. As a result, there is not the required series of scheme transactions for section 75A(1)(b).

HMRC adds that the same reasoning should apply if the transfer of the 10 properties to the parent company is for consideration and group relief under Schedule 7 is claimed.

What this means in practice

The practical point is that a pre-sale hive-out of unwanted properties will not automatically be pulled into section 75A just because it happens as part of a wider deal under which the buyer later acquires the shares in the company.

On HMRC’s example, the land transaction that matters is the transfer of the 10 unwanted properties to the parent company. The later share purchase is a separate transaction involving shares, not land. HMRC’s view is that, on these facts, the share purchase does not form part of the relevant chain of land transactions for section 75A purposes.

This matters because section 75A is aimed at land transaction arrangements. A share sale may sit alongside land transactions in a wider commercial restructuring, but that does not mean it is automatically part of the section 75A analysis.

The example is also useful where the hive-out is done for consideration and SDLT group relief is claimed. HMRC says that, even then, the same principle should apply. In other words, claiming group relief on the intra-group transfer does not by itself make the later share sale part of a section 75A scheme.

How to analyse it

If you are looking at a hive-out before a share sale, the key questions are:

• What are the actual land transactions?
• Who disposed of the chargeable interest?
• Who acquired the chargeable interest, or an interest deriving from it?
• Is there a series of transactions that are genuinely connected to that disposal and acquisition of land?
• Does the later share sale affect the land transaction itself, or is it simply a separate step in the wider commercial deal?

In this example, the relevant land transaction is the transfer of the 10 properties from Gold Nutmeg Limited to its parent. The parent is the acquirer of those properties. Yellow Acorn Limited does not acquire those 10 properties. It later acquires shares in Gold Nutmeg Limited, which by then holds only the 5 wanted properties.

So the analysis turns on whether the later share purchase is sufficiently connected with the disposal and acquisition of the 10 transferred properties. HMRC’s answer is no, because that share purchase does not alter, complete, or otherwise affect the transfer of those 10 properties.

A sensible way to approach cases like this is to separate:

• the land transfers that actually happened, and
• the corporate transactions that happened around them.

You then ask whether the corporate step is part of the relevant land acquisition chain, or merely part of the background commercial arrangement.

Example

Illustration: A buyer wants to acquire a company, but only because that company owns a small group of attractive properties. Before the sale, the seller causes the company to transfer out the other properties to another group company. The buyer then purchases the shares in the cleaned-up target company.

On the approach in HMRC’s example, the pre-sale transfer of the unwanted properties is the land transaction to examine. The later share sale is not automatically part of the section 75A chain just because the hive-out was done to make the share sale possible. What matters is whether the share sale is involved in connection with the disposal and acquisition of the transferred properties. On these facts, HMRC says it is not.

Why this can be difficult in practice

The example is helpful, but it is fact-specific and relatively brief.

The main difficulty is deciding when a transaction is truly “involved in connection with” a land disposal and acquisition. That phrase can be wider than a single conveyance, but it does not catch every step in a broader commercial project.

Points that may matter in practice include:

• whether the buyer is, in substance, obtaining the same land interest through a multi-step arrangement
• whether the land transfer and the share sale are interdependent in a way that affects who ends up with the land
• whether the later step changes the economic or legal effect of the land transaction itself
• whether there are additional steps not present in HMRC’s example

The manual example only says that, on the facts stated, the later share purchase has no impact on the transfer of the 10 properties. A different conclusion may be possible if the facts show a closer link between the land movement and the later acquisition structure.

It is also important not to overread the example. HMRC is not saying that hive-outs before share sales are always outside section 75A. It is saying that this one is, because the relevant land interests acquired are the 10 transferred properties, and the later share sale does not form part of that land acquisition chain.

Key takeaways

• A pre-sale transfer of unwanted properties out of a target company does not automatically engage section 75A just because a share sale follows.
• The section 75A analysis must focus on the actual disposal and acquisition of land interests, not simply the wider commercial deal.
• HMRC’s example also indicates that the same result should follow where the hive-out is for consideration and group relief is claimed, provided the facts are otherwise the same.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Hive-out and Sale of Transferor: Yellow Acorn’s Acquisition of Gold Nutmeg Shares

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