Lord Howard de Walden v Inland Revenue Commissioners

Holding

Anti-avoidance legislation directed at transfers of assets abroad must be construed to give effect to its anti-avoidance purpose; a taxpayer who has used elaborate machinery to avoid tax cannot complain if the resulting charge is heavy.

Facts

Lord Howard de Walden transferred assets to non-resident companies he controlled, with a view to receiving the income at his discretion while sheltering it from UK income tax. The Revenue assessed him under the transfer of assets abroad provisions of the Finance Act 1936.

Reasoning

The Court of Appeal, in a judgment frequently quoted by the House of Lords in later cases, held that the transfer-of-assets-abroad rules were broad anti-avoidance provisions. Lord Greene MR famously observed that a taxpayer who chose elaborate avoidance machinery could not complain if the charging provisions caught him heavily.