I2.206 Craven v White

I2.206 Craven v White

The decisions considered in I2.203 and I2.205 were concerned with series of transactions where each step was mapped out in advance with some precision, and where the ultimate result was for practical purposes certain at the time when there occurred the intermediate tax avoidance transactions which were sought by the Revenue to be disregarded. This is an inherent characteristic of circular transactions of the type considered in Ramsay1, but Furniss v Dawson2, in applying the Ramsay principle to linear transactions, gave rise to a problem with regard to the degree of pre-ordination needed for a series of steps to be treated as one composite transaction.

This problem was considered in detail by the House of Lords in three appeals heard together: Craven v White, IRC v Bowater Property Developments Ltd, and Baylis v Gregory3. All three appeals had in common that a transaction had been entered into with the sole purpose of avoiding or deferring tax on a future disposition that might occur, but was not certain to occur, at the time of the transaction. In Craven v White a disposition which was under active negotiation when the initial relevant transaction was carried out did ultimately take place, but it was not certain at the time of the initial transaction that that disposition would in fact take place. In the other two cases the disposition which ultimately took place was an independent one which was not in contemplation at the time of the initial transaction which avoided

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