The Ramsay principle

The Ramsay principle (or Ramsay doctrine) refers to an approach to statutory interpretation that has been developed by the courts in cases involving tax avoidance. It began with the landmark decision by the House of Lords in WT Ramsay [1981] STC 174.

The Ramsay principle can be summarised as:

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look at the law—what did Parliament intend when it chose those words?
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look at the facts—should an individual transaction be considered as part of a wider context?
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in light of the first two steps, how does the law apply to these facts?

There is a large body of case law dealing with the Ramsay principle. For a general introduction to the subject, see Practice Note: Ramsay as a guide to statutory construction, and, for a list of cases that have been important in the development of the principle, see Practice Note: Ramsay case law—chronology and cheat sheet.

The Ramsay principle has not been applied to VAT. VAT has historically been governed by EU law principles and the case law approach to VAT avoidance instead takes its name from a

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