As an exception to the general rule, it is not invariably necessary to show, in relation to multi party transactions, that every party to it knew it was a sham.
Arden LJ said: ‘Third, the fact that the act or document is uncommercial, or even artificial, does not mean that it is a sham. A distinction is to be drawn between the situation where parties make an agreement which is unfavourable to one of them, or artificial, and a situation where they intend some other arrangement to bind them. In the former situation, they intend the agreement to take effect according to its tenor. In the latter situation, the agreement is not to bind their relationship.’
Citations:
[2001] EWCA Civ 63, [2001] STC 214
Links:
Jurisdiction:
England and Wales
Citing:
Appeal from – Hitch and Others v Stone (Inspector of Taxes) ChD 7-Apr-1999
A tax avoidance scheme was effective despite being complex and artificial. The documents affected third party rights in potential development land, and it was impossible to conclude it was a sham. . .
Cited by:
See Also – Roger Stone (HM Inspector of Taxes) v Richard Henry Hitch; Thomas Henry Hitch and Ian Geoffrey Handy CA 26-Jan-2001
The essence of whether a deed was a sham, was whether the deed proclaimed one set of intentions, but the parties acted out another. The deeds in this case were capable of being seen as a sham as respects one or more deeds in the combination of . .
Cited – Revenue and Customs v Dempster (T/A Boulevard) ChD 24-Jan-2008
The revenue wished to refuse a claim to set off input tax for two transactions involving the alleged purchase of software. They said the transactions were a sham.
Held: The revenue’s appeal failed.
Briggs J said: ‘the critical question . .
Lists of cited by and citing cases may be incomplete.
Taxes Management
Updated: 10 July 2022; Ref: scu.200751