Pre-Sale Solvent Liquidation Preserves SDLT Group Relief Without Triggering Anti-Avoidance Rules

A recent decision of the First-tier Tribunal (FTT) in HC-One No.1 Ltd V HMRC, decided on 8 May 2026, clarifies that a pre-sale solvent liquidation under Paragraph 4(4) of Schedule 7 of the Finance Act 2003 (the “Act”) to avoid SDLT group relief clawback does not trigger the anti-avoidance rule as it lacks a main purpose of tax avoidance.

In 2016, the BUPA corporate group (Group) undertook a substantial corporate reorganisation as part of Project Oval, a planned divestment of a large portfolio of care homes due to brand risks, regulatory pressures, and poor returns. Between July and November 2016, 98 English care home properties were transferred from eight operating companies (OpCos) within Group to HC-One No.1 Limited (the “Appellant”), a newly incorporated subsidiary intended to act as the sale vehicle. SDLT group relief was claimed on those transfers. On 29 June 2017, before the share sale agreement was entered into, Bupa Care Homes Group Limited (BCHGL), a company above the OpCos in the group structure, was placed into members’ voluntary liquidation. The Appellant was later sold to HC-One, de-grouping within three years of the intra-group transfers.

The key issue before the FTT was whether the arrangements had a main purpose of avoiding SDLT liability under Paragraph 2(4A) of Schedule 7 of the Act denying group relief and whether the transfers, liquidation, and share sale were "scheme transactions" under Section 75A of the Act, giving rise to a notional land transaction and a recharacterised SDLT liability by comparing the tax on the actual transactions with that on the notional transaction.

The FTT allowed the appeal. It held that the liquidation of BCHGL fell within Paragraph 4(4) of Schedule 7 of the Act and did not amount to tax avoidance. Paragraph 4(4) of Schedule 7 of the Act was not limited to insolvent liquidations or liquidations with a commercial motivation, and the FTT refused to read such limitations into the legislation. Although the timing of the liquidation was driven by the desire to preserve group relief, the liquidation was legally effective and carried real legal and economic consequences. The FTT also held that Section 75A of the Act did not apply. The liquidation and later share sale were not transactions “involved in connection with” the disposal by the OpCos and acquisition by the Appellant as per test from the Tower One case. They formed part of the wider divestment, but they were not part of the series of transactions by which the chargeable interests passed from the OpCos to the Appellant.

In conclusion, the Appellant’s claim to SDLT group relief succeeded. The case is important because it confirms that Paragraph 4(4) of Schedule 7 of the Act may preserve group relief where a genuine winding up occurs, even where the liquidation is timed to avoid a clawback, and that Section 75A of the Act does not extend merely to every transaction forming part of a wider commercial divestment.

Read the full decision of HC-One No.1 Ltd V HMRC [2026] UKFTT 678 (TC) here.