Ramsay and composite transactions
Ramsay and composite transactions

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Ramsay and composite transactions
  • Circular, self-cancelling transactions
  • WT Ramsay; Eilbeck v Rawling
  • Schofield
  • Price
  • Cape and Wiseman
  • Linear transactions
  • Furniss v Dawson
  • McGuckian
  • More linear cases
  • More...

Lexis®PSL Tax is grateful to Nigel Doran of Macfarlanes LLP for his comments on an earlier draft of this Practice Note. However, the views expressed are those of Lexis®PSL Tax.

The Ramsay principle is an approach to statutory interpretation that has been developed by the courts in cases involving tax avoidance. For a general introduction to the Ramsay principle, see Practice Note: Ramsay as a guide to statutory construction.

This Practice Note is about cases in which the courts have applied the Ramsay principle in order to take a realistic view of what have become known as composite transactions, ie transactions that involve a number of steps, designed to operate together to produce a particular outcome. Other themes that have developed in cases in which a Ramsay analysis has been applied to the facts are discussed in Practice Note: Ramsay—reality and legal form.

Composite transactions have been divided into two categories:

  1. circular, self-cancelling transactions—transactions undertaken purely for tax reasons, in which typically the taxpayer would be in the same position (ignoring tax considerations) at the end as at the beginning, apart from having paid an advisers' fee

  2. linear transactions—transactions that achieve a commercial (non-tax) purpose but which have elements that have been included for tax reasons

This Practice Note looks at how the Ramsay principle has been applied to both of these types of composite transaction, and concludes

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