Example 6: Distribution and Onward Sale of Property by White Water Limited

SDLT anti-avoidance on intra-group property transfers followed by a share sale

HMRC’s example shows that an intra-group property transfer can still lead to SDLT under section 75A Finance Act 2003 if it forms part of a wider plan ending in the sale of a company holding the property. Even if the land transfer itself would not normally trigger SDLT and the buyer only acquires shares, HMRC may treat the whole arrangement as a notional direct land transfer and charge SDLT on that basis.

• Section 75A can apply where land is disposed of and acquired through a series of connected steps that produce less SDLT than a direct land transfer would have done.
• In HMRC’s example, property was moved within a group into a new company and that company was then sold to the buyer by a share sale.
• HMRC says the later share sale can still be part of the wider scheme, even though share sales are normally outside SDLT and happened after the land moved.
• The notional SDLT charge is tested by reference to the last scheme transaction, which may mean group status has ended and group relief or market value protections are no longer available.
• HMRC’s view is that the deemed consideration may be the buyer’s share purchase price if that is the largest amount given under the overall arrangement.
• In practice, the key questions are whether the steps were planned together, how widely the scheme transactions should be defined, and whether any payment is truly only incidental.

Scroll down for the full analysis.

SDLT anti-avoidance: distribution of property within a group followed by a share sale

This page explains an HMRC example on section 75A Finance Act 2003. The example shows how SDLT can arise even where the direct property transfer within a group would otherwise produce no SDLT, if that transfer is part of a wider plan ending in the sale of a company holding the property.

What this rule is about

The issue is whether a series of connected steps should be looked at separately, or whether SDLT law treats them as part of a wider scheme whose real effect is that land has moved from one person to another for value.

Section 75A is an anti-avoidance rule. It can apply where:

• one person disposes of a chargeable interest in land,
• another person acquires it,
• there are one or more connected transactions in between, and
• the SDLT payable on the actual transactions is less than the SDLT that would arise on a notional direct land transaction.

The example concerns a group reorganisation used to separate out part of a property business into a new company, followed by a sale of that new company’s shares to a buyer. The key point is that the share sale itself is outside SDLT, but it may still be one of the “scheme transactions” for section 75A purposes.

What the official source says

In HMRC’s example, Blue Fire Limited owns White Water Limited. White Water has a mix of properties: some in a property rental business and some in a development business. A buyer, Freddie, wants only the rental business and the properties used in it.

To achieve that, the group inserts a new company, Fred Limited, above White Water by a share-for-share exchange. White Water then distributes the rental business properties to Fred Limited. The shares in White Water are then transferred back so that Fred Limited ends up holding only the desired business and properties, with no subsidiary beneath it. Freddie then buys all the shares in Fred Limited.

HMRC says no SDLT arises on the actual transfer of the properties from White Water to Fred Limited because section 53 market value rules do not apply, due to case 3 of section 54. The other steps are outside SDLT.

But HMRC then says section 75A does apply. On its analysis:

• White Water is the vendor for section 75A purposes because it disposed of the chargeable interests.
• Fred Limited is the purchaser for section 75A purposes because it acquired them.
• The connected “scheme transactions” include the property distribution, the transfer of White Water shares back to Blue Fire, and Freddie’s purchase of Fred Limited.
• Freddie’s purchase of the shares can count as a scheme transaction even though it happens after Fred Limited acquired the land, because section 75A can look at later transactions as well.

HMRC’s conclusion is that the notional direct land transaction between White Water and Fred Limited produces more SDLT than the actual steps, so section 75A substitutes that notional transaction.

HMRC also says the effective date of the notional transaction is the date of the last scheme transaction, which here is Freddie’s share purchase. On that date, White Water and Fred Limited are no longer in the same group. Because of that:

• the notional transaction does not escape a market value charge under section 53 on the basis of group status, and
• group relief is not available, because the companies are not grouped on the effective date.

HMRC’s view is that the chargeable consideration for the notional transaction is likely to be the amount Freddie paid for the shares in Fred Limited, because section 75A looks to the largest amount, or aggregate amount, given under the scheme transactions.

Finally, HMRC says that amount cannot be disregarded under section 75B. In HMRC’s view, Freddie’s share purchase is not merely incidental to the transfer of the properties. It is a central part of the overall arrangement.

What this means in practice

This example matters because it shows that a tax-free or low-tax intra-group property transfer may still be caught if it is only one step in a wider plan to deliver property to a buyer through a company sale.

Looking at the steps one by one, the structure may appear attractive:

• the land moves within the group,
• the direct land transfer may produce no SDLT, and
• the buyer then acquires shares, which is not itself an SDLT event.

But section 75A asks a different question. It asks whether, taking the connected steps together, the outcome is effectively that land has moved from one party to another for consideration, with less SDLT than would have been due on a straightforward land transfer.

On HMRC’s analysis, the answer here is yes. The buyer’s payment for the shares is treated as part of the wider scheme connected to the movement of the land into Fred Limited. That payment then feeds into the deemed consideration for the notional land transaction.

The practical result is that SDLT can be charged by reference to a deemed direct transfer of the land from White Water to Fred Limited, even though:

• the actual land transfer was intra-group,
• the buyer did not directly buy the land, and
• the buyer only bought shares.

How to analyse it

When looking at a structure of this kind, the sensible questions are:

• Who actually disposed of the land?
• Who actually acquired the land?
• What transactions were carried out in connection with that disposal and acquisition?
• Were those transactions interdependent or planned as part of one overall arrangement?
• Was a later share sale always contemplated as part of the plan?
• Does the total SDLT on the real steps come out lower than the SDLT on a notional direct land transfer?
• What is the last scheme transaction, since that can fix the effective date of the notional transaction?
• On that effective date, are the relevant companies still in the same group for market value and group relief purposes?
• What is the largest amount, or aggregate amount, given under the scheme transactions?
• Can any amount genuinely be ignored as merely incidental under section 75B, or is it really part of the commercial core of the arrangement?

This example especially highlights the importance of timing. Reliefs or exclusions that might have applied when the property first moved may not be available for the notional section 75A transaction if the relevant group relationship has disappeared by the time the last scheme transaction occurs.

Example

Illustration: A parent company owns a subsidiary with two businesses. A buyer wants only one of them, including the related properties. The group moves those properties into a newly inserted company and then sells that company to the buyer. The internal property transfer appears to produce no SDLT, and the share sale is outside SDLT.

On HMRC’s approach in this example, that is not the end of the matter. If the internal transfer and the later share sale were all part of a single planned arrangement, section 75A may treat the case as if there had been a direct land transaction. The deemed consideration may be the price paid by the buyer for the shares in the new company.

Why this can be difficult in practice

The difficult part is often deciding how far the “scheme transactions” extend and whether a later share sale is sufficiently connected to the earlier land transfer.

HMRC’s example takes a broad view. It relies heavily on the fact that the share sale was always envisaged. That means the factual evidence matters. Documents, board minutes, sale negotiations, heads of terms, and transaction sequencing may all be relevant to whether the steps are truly part of one scheme.

Another difficulty is that the notional transaction under section 75A is not simply a replay of the actual land transfer. Its effective date is determined by the legislation, and that can change whether group-based rules apply. A structure that appears to fit within group rules at one stage may fail once section 75A resets the analysis by reference to the last scheme transaction.

There can also be judgment in identifying the relevant consideration under section 75A(5), especially where multiple transactions and payments are involved. HMRC says the share price would likely be the relevant amount here, but the legislation requires a careful examination of what amounts were given for the scheme transactions.

Finally, section 75B can exclude amounts that are merely incidental, but that is a narrow idea. A payment that is central to the commercial objective of the arrangement is unlikely to be merely incidental.

Key takeaways

• An intra-group property transfer followed by a company sale can still trigger SDLT under section 75A.
• A share sale can be a “scheme transaction” even if it happens after the land has already moved.
• For section 75A, the timing of the last scheme transaction can determine whether market value rules or group relief are available.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Example 6: Distribution and Onward Sale of Property by White Water Limited

View all HMRC SDLT Guidance Pages Here