Inland Revenue Commissioners v. Duke of Westminster

Holding

Every person is entitled to so arrange their affairs that the tax attaching is less than it otherwise would be, and the courts will give effect to such arrangements unless the statute otherwise provides.

Facts

The Duke replaced wages to his servants with covenanted annuity payments to obtain a tax advantage. The Inland Revenue argued the arrangement should be disregarded.

Reasoning

Lord Tomlin's much-quoted dictum became the foundation of the 'form over substance' approach in UK tax law. The principle has been significantly narrowed by the Ramsay doctrine and later anti-avoidance developments.