A2.124 HMRC practice and the principle of 'legitimate expectation'
For the reasons set out above, the so-called 'Ramsay doctrine' represents the application of a purposive construction of taxing legislation to a realistic view of the facts, and to that extent it was, and is, a clear departure from the 'blinkered' view that the courts had mostly felt bound to take of tax avoidance schemes, as exemplified by what might be called the 'Duke of Westminster approach'. In the words of Lord Nicholls in Barclays Mercantile Business Finance Ltd1, 'the Ramsay case did not introduce a new doctrine operating within the special field of revenue statutes. On the contrary, as Lord Steyn observed in McGuckian2, it rescued tax law from being 'some island of literal interpretation' and brought it within generally applicable principles'.
However, taxpayers may wish to arrange their affairs not only on the basis of the law but also on the basis of the relevant HMRC practice, which may not always correspond precisely to the current state of the law. Although HMRC's guidance cannot as a rule be taken as binding in every circumstance (precisely because the circumstances of individual cases will differ), it may nevertheless provide a measure of comfort to those who intend to save tax by undertaking a type of transaction expressly envisaged as effective by published HMRC guidance. In certain circumstances the published position of HMRC can give rise to a legitimate and enforceable expectation on the part of the taxpayer that his circumstances will be
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