SDLT on de-enveloping transactions

HMRC recently issued clarification on its comments on the Stamp Duty Land Tax (SDLT) implications of de-enveloping property by distribution in specie.

The clarification sets out two scenarios where HMRC considers that no consideration is given for SDLT purposes.

The first is where there company is debt free and the shareholder gives no consideration for receiving the property distribution. 

The second is where there is debt but it is owed solely to the shareholder.

However, where there is a third party loan secured on the property when the company is liquidated, the transfer of the property by the company on a distribution will attract SDLT where there is an assumption by the shareholders of liability for that debt.

Situations may arise where a company has a third party debt that has been repaid as a result of shareholder actions (for example, by them subscribing for more shares or by them simply replacing the third party debt with their own shareholder debt), prior to its liquidation.  It would appear that in such cases where the property is distributed, no SDLT will arise as it will be a distribution in similar circumstances to the first two situations outlined above.

The clarification also addresses the findings of the First Tier Tribunal in the case of Project Blue.  The decision confirms that section 75A (the relevant anti-avoidance legislation) applies regardless of the purposes or motives of the parties:

For more information, please contact Brian Garner at