Court of Appeal in Project Blue: the fog clears

Project Blue involved the sale of Chelsea Barracks for £959m by the Ministry of Defence to property developers in 2008. Ordinarily HMRC would have expected to receive £38m in stamp tax on this transaction. However HMRC received nothing and challenged the SDLT planning used by the purchaser Project Blue Ltd which relied on a combination of the sub-sale provisions in FA 2003 s 45 and the exemptions for Sharia funding in FA 2003 s 71A. In a particularly bittersweet result for HMRC the Court of Appeal held that although the taxpayer’s SDLT planning failed because the Sharia funding exemption was not available on a proper analysis of the sub-sale arrangement HMRC had assessed the wrong person and was now out of time to assess the correct person. On behalf of taxpayers it must be asked why the MoD did not make it...