Ramsay and prescriptive statutory language
Ramsay and prescriptive statutory language

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

  • Ramsay and prescriptive statutory language
  • Macniven v Westmoreland
  • Facts
  • Application of the Ramsay principle
  • Lord Hoffmann and legal versus commercial concepts
  • Lessons from Macniven
  • Mayes
  • Facts
  • Judgment of the Court of Appeal
  • Mayes and the development of the GAAR

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 background to the Ramsay principle is described in Practice Note: Ramsay as a guide to statutory construction.

As the courts have developed the Ramsay principle, a number of different aspects of the principle have emerged. One of these aspects is that some taxing statutes use such technical and/or prescriptive language that Ramsay does not apply, in the sense that it does not change the tax treatment of the transactions in question. This follows from the basic tenet that the Ramsay principle is one of statutory construction: if a transaction answers to a statutory description, then it will be taxed as the statute provides, however much the taxpayer may have been motivated by reducing their tax bill.

Other aspects of the Ramsay principle are described in other Practice Notes (see: Ramsay and composite transactions, Ramsay—reality and legal form and Ramsay in reverse).

Macniven v Westmoreland

Macniven v Westmoreland was a case in which the Revenue was unsuccessful in using the Ramsay principle to defeat an arrangement that had been entered into purely for tax reasons. The transactions fell within the statutory description, and the wording of the legislation was such that there was no alternative, purposive construction that the

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