Ramsay principle

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In W T Ramsay Ltd v IRC [1981] AC 300 (HL) the House of Lords considered a claim that certain self-cancelling transactions could be used to create a non-taxable gain and a tax relievable loss. The Lords applied what became known as the Ramsay doctrine, stating that the court was entitled to look at the whole transaction and so to conclude that the taxpayer had not suffered a loss. The Ramsay principle is considered by some commentators to be a judicial limitation on the * Westminster doctrine established 45 years earlier. It is interesting to note that the decision of the House of Lords in IRC v Duke of Westminster was by a majority: the most senior Law Lord on the panel decided against the Duke by proposing an argument that was effectively that adopted years later in Ramsay v IRC.

The Ramsay doctrine was developed in IRC v Burma Oil Ltd [1982] STC 30 (HL) and Furniss v Dawson [1984] STC 153 (HL), then effectively limited in MacNiven v Westmoreland Investments [2001] STC 237 (HL); on one view, it was finally put to rest in Barclays Mercantile v Mawson [2005] STC 1 (HL).

Subjects: Law.

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