Inland Revenue Commissioners v. Scottish Provident Institution

Holding

The Ramsay approach requires the court to consider the transaction in its commercial reality and disregard steps inserted solely to obtain a tax advantage.

Facts

Scottish Provident entered an artificial gilt-trade scheme designed to generate a deductible loss.

Reasoning

The House of Lords applied Ramsay to disregard the artificial steps and held the loss was not allowable. The decision continued the refinement of the Ramsay principle in modern UK tax law.