W.T. Ramsay Ltd v. Inland Revenue Commissioners

Holding

Where a transaction consists of preordained steps inserted for the sole purpose of tax avoidance and having no commercial purpose other than tax saving, the courts may consider the transaction as a whole rather than its individual steps.

Facts

Ramsay used a circular scheme involving artificial loans designed to manufacture a tax loss to offset a chargeable gain.

Reasoning

Lord Wilberforce held that a fiscal nullity doctrine could apply to disregard transactional steps that had no commercial purpose other than tax avoidance. The Ramsay principle materially modified the Westminster approach.