Anti-Avoidance Rules: GAAR & Section 75A
Understanding HMRC's powerful tools to combat stamp duty avoidance schemes, including recent Court of Appeal precedent
In this article
HMRC has two principal weapons in its arsenal to combat artificial arrangements designed to reduce or avoid Stamp Duty Land Tax: the General Anti-Abuse Rule (GAAR) and the SDLT-specific Section 75A. Following the January 2026 Court of Appeal decision in Tower One St George Wharf v HMRC, the reach of s75A has been significantly broadened, exposing many previously accepted structures to challenge.
What is the General Anti-Abuse Rule (GAAR)?
The GAAR was introduced in Part 5 of the Finance Act 2013 and applies to all UK taxes, including Stamp Duty Land Tax. It targets tax arrangements that are abusive, applying a "double reasonableness" test to determine whether a scheme goes beyond legitimate tax planning.
Key Elements of the GAAR
- •Double Reasonableness Test: Arrangements are abusive if they cannot reasonably be regarded as a reasonable course of action
- •GAAR Advisory Panel: Independent panel provides opinions on whether arrangements are reasonable before HMRC can apply the GAAR
- •Counteraction: HMRC can make just and reasonable adjustments to counteract tax advantages from abusive arrangements
- •Penalties: 60% penalty can apply to defeated GAAR cases, or 20% if disclosed under DOTAS
The GAAR is deliberately drafted broadly to capture arrangements that exploit loopholes or technicalities in ways Parliament never intended. It focuses on the substance of transactions rather than their legal form, examining whether arrangements are commercially realistic or purely contrived for tax purposes.
Section 75A: SDLT-Specific Anti-Avoidance
Section 75A of the Finance Act 2003 is specifically targeted at SDLT avoidance. Unlike the broad GAAR, s75A is designed exclusively for land transactions and applies where arrangements are entered into with a main purpose of avoiding or reducing SDLT liability.
How Section 75A Works
Under s75A, HMRC can issue a notice requiring a person to notify arrangements if:
- 1.Arrangements are entered into with a main purpose of avoiding or reducing SDLT
- 2.The arrangements achieve that purpose by means contrary to the policy objectives of the SDLT legislation
- 3.HMRC can then make just and reasonable adjustments to counteract the tax advantage
The critical difference from the GAAR is that s75A does not require reference to the GAAR Advisory Panel and has a lower threshold for intervention. HMRC need only show that avoiding SDLT was a "main purpose" rather than proving the arrangements are abusive under the double reasonableness test.
The Tower One Precedent
Tower One St George Wharf v HMRC [2025] EWCA Civ 1588
In January 2026, the Court of Appeal delivered a landmark ruling that significantly broadened the interpretation of Section 75A, with major implications for corporate property structures and intra-group transactions.
The Facts
Tower One involved a corporate group that restructured property holdings using intra-group transfers at nil or reduced SDLT rates, followed by eventual external disposal. HMRC challenged the arrangements under s75A, arguing that the series of transactions was designed primarily to avoid SDLT.
The Decision
The Court of Appeal ruled that:
- •S75A applies even where transactions use legislatively approved reliefs if the overall purpose is SDLT avoidance
- •Intra-group relief cannot shield arrangements from s75A scrutiny where commercial justification is weak
- •The "main purpose" test examines the entire series of transactions, not each step in isolation
- •HMRC has broad discretion in making "just and reasonable" adjustments to counteract avoidance
The Tower One decision marks a watershed moment in SDLT enforcement. Previously, many advisers believed that transactions qualifying for statutory reliefs were protected from anti-avoidance challenge. The Court of Appeal has now made clear that relief availability does not immunize arrangements from s75A.
Practical Implications
Corporate groups must now demonstrate genuine commercial reasons for intra-group property transfers beyond tax efficiency. Structures involving circular transactions, temporary holdings, or artificial steps face heightened scrutiny. Many arrangements designed pre-2026 may now be exposed to retrospective challenge.
How GAAR and Section 75A Interact
HMRC can use both the GAAR and s75A to challenge the same arrangements, though in practice they typically choose the most effective tool for each case. The key differences influence HMRC's strategy:
GAAR
- ✓Applies to all UK taxes
- ✓Requires double reasonableness test
- ✓Must refer to Advisory Panel
- ✓Higher evidential burden
- ✓60% penalty possible
Section 75A
- ✓SDLT-specific only
- ✓Main purpose test (lower threshold)
- ✓No Advisory Panel required
- ✓Faster enforcement process
- ✓Standard SDLT penalties apply
Following Tower One, HMRC increasingly favors s75A for SDLT challenges due to its procedural advantages and lower burden of proof. The GAAR remains valuable for multi-tax schemes or where particularly egregious abuse can be demonstrated to justify higher penalties.
Before and After April 2025 Changes
| Measure | Before April 2025 | From April 2025 |
|---|---|---|
| Nil-Rate Band | £250,000 | £125,000 |
| Additional Dwelling Surcharge | 3% | 5% |
| Corporate Rate (non-residential) | 15% | 17% |
| Section 75A Scope | Applied to specific schemes | Broadened by Court of Appeal (Jan 2026) |
| GAAR Enforcement | Active | More aggressively applied |
| Intra-Group Relief | Available with conditions | Now exposed to s75A challenge |
| Finance Bill 2026 | N/A | Proposes promotion prohibition |
Notification and Assessment Process Under Section 75A
When HMRC suspects arrangements fall within s75A, they follow a structured process to challenge and counteract the perceived avoidance:
Initial Inquiry
HMRC opens an enquiry into the SDLT return, requesting detailed information about the transaction structure and commercial rationale.
Notification Requirement
HMRC may issue a notice requiring notification of arrangements under s75A, with supporting documentation and explanation of tax positions taken.
Analysis and Determination
HMRC evaluates whether arrangements meet the s75A criteria: main purpose of SDLT avoidance achieved contrary to legislative policy objectives.
Counteraction Notice
If HMRC determines s75A applies, they issue a counteraction notice making "just and reasonable" adjustments to calculate the SDLT that should have been paid.
Assessment and Appeal Rights
HMRC raises an assessment for additional SDLT, interest, and potential penalties. Taxpayers have standard appeal rights through the Tax Tribunal system.
Time Limits Extended
For arrangements within s75A, HMRC has an extended assessment window of up to 6 years from the transaction date, or longer in cases of careless or deliberate behavior. The Tower One decision suggests HMRC may revisit older arrangements previously considered settled.
Practical Implications for Taxpayers
The expanded interpretation of s75A following Tower One has several immediate consequences for property transactions:
High-Risk Structures
- ✗Circular intra-group transfers without commercial substance
- ✗Sub-sale arrangements designed purely for SDLT efficiency
- ✗Artificial partnership structures to claim multiple dwellings relief
- ✗Use of trusts or nominees to fragment ownership artificially
Protective Measures
- ✓Document genuine commercial reasons for transaction structures
- ✓Obtain professional advice before implementing complex arrangements
- ✓Consider voluntary disclosure under DOTAS where appropriate
- ✓Review historical structures for potential exposure to challenge
The 2026 Finance Bill proposes additional measures including potential prohibition on promoting certain SDLT avoidance schemes and enhanced penalties for enablers. Taxpayers should be particularly cautious about "off-the-shelf" schemes marketed as guaranteed SDLT savings, as these are prime targets for HMRC challenge under both s75A and the GAAR.
When to Seek Professional Advice
Given the complexity and serious consequences of anti-avoidance challenges, professional advice is essential in the following situations:
Before Transactions
- • Corporate restructuring involving property
- • Intra-group transfers with external disposal planned
- • Transactions qualifying for reliefs or exemptions
- • High-value purchases over £1 million
After HMRC Contact
- • Receipt of s75A notification requirement
- • GAAR counteraction notice issued
- • Enquiry into SDLT return opened
- • Discovery assessment received
Related Resources
Landmark Stamp Duty Cases
Analysis of key legal precedents shaping SDLT interpretation and enforcement
Avoidance vs Evasion
Understanding the crucial distinction between lawful planning and illegal evasion
DOTAS Disclosure Requirements
Disclosure of Tax Avoidance Schemes obligations for SDLT arrangements
Legal & Compliance Hub
Complete guide to stamp duty legal framework and compliance requirements
Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.
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