In July 2013, the Stamp Duty Land Tax (SDLT) case of Project Blue Ltd v. HM Revenue & Customs, concerning the high-profile development of Chelsea Barracks, was the first real test of the SDLT’s broad anti-avoidance rule (Section 75A of the Finance Act 2003). This advisory considers why Project Blue has attracted mass media comment and why the real estate sector should take note of it.

The Transaction -

The transaction (including the SDLT scheme) can be summarised as follows:

- In 2007, Project Blue Ltd (P), a Guernsey company (then a joint venture between Qatari Diar and CPC Group), agreed to purchase the freehold of Chelsea Barracks from the Ministry of Defence (MoD) for £959 million.

- In January 2008, P entered into a sale and leaseback agreement with a Qatari financial institution specialising in Shariacompliant finance (“Bank”), together with put and call options under which P could repurchase the freehold at the expiry of a 999-year “finance period.”

- The MoD transferred the freehold to P, P transferred the freehold to Bank and Bank leased the property back to P.