MacNiven (Inspector of Taxes) v Westmoreland Investments Ltd: HL 15 Feb 2001

The fact that a payment of interest was made only to create a tax advantage did not prevent its being properly claimed. Interest was paid for the purposes of setting it against tax, when the debt was discharged. A company with substantial losses had been sold to a company who sought to set those losses against its own profits. An additional loan had to be made to pay off the interests and to allow the claim to proceed. Ramsay decided that when it is sought to attach a tax consequence to a transaction, the courts must ascertain the legal nature of the transaction. If that emerges from a series or combination of transactions, intended to operate as such, it is that series or combination which may be regarded. Courts are entitled to look at a pre-arranged tax avoidance scheme as a whole. It matters not whether the parties intention to proceed with a scheme through all its stages takes the form of a contractual obligation or is expressed only as an expectation without contractual force. Lord Nicholls of Birkenhead: ‘The paramount question always is one of interpretation of the particular statutory provision and its application to the facts of the case.’ Lord Hoffmann: If a statute laid down requirements by reference to some commercial concept such as gain or loss, it would usually follow that elements inserted into a composite transaction without any commercial purpose could be disregarded, whereas if the requirements of the statute were purely by reference to its legal nature (here the discharge of a debt) then an act having that legal effect would suffice, whatever its commercial purpose may have been.
Lord Nicholls of Birkenhead, Lord Hoffmann
Gazette 15-Feb-2001, Times 14-Feb-2001, [2001] UKHL 6, [2001] 1 All ER 865, (2001) 73 TC 1, [2001] 2 WLR 377, [2003] 1 AC 311
House of Lords, Bailii
Income and Corporation Taxes Act 1988 338(3)
England and Wales
ExplainedW T Ramsay Ltd v Inland Revenue Commissioners HL 12-Mar-1981
The taxpayers used schemes to create allowable losses, and now appealed assessment to tax. The schemes involved a series of transactions none of which were a sham, but which had the effect of cancelling each other out.
Held: If the true nature . .
At CAMcNiven (Inspector of Taxes) v Westmoreland Investments Ltd CA 26-Oct-1998
Cross loans were made between an investment company and pension schemes. The overall effect was to create payments which could be set off against Corporation Tax. They were not a pre-ordained series of transactions where the underlying loans were . .
At ChdMcNiven (Inspector of Taxes) v Westmoreland Investments Ltd ChD 19-Aug-1997
Loans made between associated companies for the sole purpose of creating a charge to tax were ineffective as avoidance scheme. . .

Cited by:
CitedInland Revenue Commissioners v John Lewis Properties Ltd CA 20-Dec-2002
The taxpayer company purchased properties to be occupied by other companies within the same group. Having granted leases, they assigned the rental income for the first six years to a bank in return for a capital payment. They then sought relief from . .
CitedGrimm v Newman Chantry Vellacott DFK CA 7-Nov-2002
Accountants appealed a finding of professional negligence. They had advised an american resident in Britain that he could transfer assets to his wife here without adverse tax consequences. At the trial the judge had considered an alternative scheme . .
CitedBMBF (No 24) Limited v the Commissioners of Inland Revenue CA 6-Nov-2003
The taxpayer, a non-resident, operated a sale and lease back scheme of machinery to be used in its business within the UK. There had been a chain of leases.
Held: The court had first to identify the ‘relevant lease’. It was the head lease . .
CitedBrian Andrew O’Neil, Moira O’Neil, Lyndon Lee McDougall, and John James McDougall v Commissioner of Inland Revenue PC 10-Apr-2001
PC (New Zealand) An accountant arranged a scheme which purported to return the applicants’ entire income without deduction of tax as a return of capital. The revenue sought to treat it as tax avoidance.
CitedMacDonald (HM Inspector of Taxes) v Dextra Accessories Ltd and others CA 28-Jan-2004
The company had set up a trust for the benefit of its employees. The Inspector sought to tax the payments made into the trust as ’emoluments’
Held: The appeal was allowed. The payments were ‘potential emoluments’ which were held by the . .
CitedBarclays Mercantile Business Finance Ltd v Mawson (HM Inspector of Taxes) HL 25-Nov-2004
The company had paid substantial sums out in establishing a gas pipeline, and claimed those sums against its tax as capital allowances. The transaction involved a sale and leaseback arrangement which the special commissioners had found to be a . .
CitedTotal Network Sl v Revenue and Customs HL 12-Mar-2008
The House was asked whether an action for unlawful means conspiracy was available against a participant in a missing trader intra-community, or carousel, fraud. The company appealed a finding of liability saying that the VAT Act and Regulations . .
CitedCollector of Stamp Revenue v Arrowtown Assets Ltd 4-Dec-2003
(Hong Kong Final Court of Appeal) The court was asked as to the accounting treatment of interests incurred in the development for the purpose of generating the profits, and therefore whether the relevant Ordinance prohibited the capitalisation of . .
CitedCampbell v Inland Revenue Commissioners SCIT 6-Jul-2004
SCIT INCOME TAX – Anti-Avoidance – Relevant discounted security – Loss on gift to wife – Subscription for security and gift part of scheme to produce loss – Avoidance not the Appellant’s sole purpose in . .
CitedUBS Ag and Another v Revenue and Customs SC 9-Mar-2016
UBS AG devised an employee bonus scheme to take advantage of the provisions of Chapter 2 of the 2003 Act, with the sole purpose other than tax avoidance, and such consequential advantages as would flow from tax avoidance. Several pre-ordained steps . .
CitedProject Blue Ltd v Revenue and Customs SC 13-Jun-2018
The purchaser of land created a sub-sale and leaseback with bank so as to fund the purchase in a manner which would comply with Islamic finance principles. The Court was now asked whether purchaser or the bank were liable for stamp duty land tax on . .

Lists of cited by and citing cases may be incomplete.
Updated: 28 July 2021; Ref: scu.83286