Tax Avoidance - Revision history

Ruth Shaw at 08:11, 9 April 2026

2026-04-09T08:11:20Z

Ruth Shaw at 08:06, 9 April 2026

2026-04-09T08:06:51Z

Ruth Shaw: /* Validity of tax avoidance */

2026-04-09T07:51:33Z

‎Validity of tax avoidance

Ruth Shaw: /* Validity of tax avoidance */

2026-04-09T07:51:20Z

‎Validity of tax avoidance

Ruth Shaw: /* Validity of tax avoidance */

2026-04-09T07:50:50Z

‎Validity of tax avoidance

Ruth Shaw: /* Categorisation of avoidance */

2026-04-09T07:50:22Z

‎Categorisation of avoidance

Ruth Shaw: /* Avoidance: Discretionary remedies */

2026-04-09T07:49:36Z

‎Avoidance: Discretionary remedies

Ruth Shaw: /* Context of discussion */

2026-04-09T07:49:10Z

‎Context of discussion

Ruth Shaw: /* Retrospective legislation: Extent */

2026-04-09T07:48:24Z

‎Retrospective legislation: Extent

Ruth Shaw: /* =Does avoidance merge into evasion */

2026-04-09T07:46:45Z

‎=Does avoidance merge into evasion

@@ Line 195: / Line 195: @@
 If one wishes to assess emotional and moral responses to avoidance, and actual or theoretical anti-avoidance rules, we need further vocabulary to discuss the range of tax-motivated behaviour.
-We might cover the terrain in four categories:<ref>There are many ways to slice this cake.  Lord Walker proposed seven types of tax avoidance (a riff on Empson's <i>Seven Types of Ambiguity</i>): "Ramsay 25 years on" [2004] LQR 120.  Contrast Barnett, "A baker's dozen" Taxation Magazine, 2 August 2012. But one must resist the temptation to taxonomy for its own sake.  Classification is (or should be) purposive: a useful taxonomy must draw <i>useful </i>distinctions: it should identify categories which matters because they call for different responses, and only those.</ref>
+We might cover the terrain in four categories:<ref>There are many ways to slice this cake.  Lord Walker proposed seven types of tax avoidance (a riff on Empson's <i>Seven Types of Ambiguity</i>): "Ramsay 25 years on" [2004] LQR 120.  Contrast Barnett, "A baker's dozen" Taxation Magazine, 2 August 2012. But one must resist the temptation to taxonomy for its own sake.  Classification is (or should be) purposive: a useful taxonomy must draw <i>useful </i>distinctions: it should identify categories which matter because they call for different responses, and only those.</ref>
 <b>Uncontroversial tax planning</b> Taking advantage of a tax relief in a manner <i>everyone</i> would accept as reasonable and indeed desirable. As this is at the bottom of the spectrum, it is easy to find clear examples: for instance, pension contributions, and moderate<ref>In the debate on the Budget 2012, some said that giving more than £50k or 25% of income to charity was excessive.</ref> charity giving.<ref>These are the examples which Cameron called "sensible tax planning" in the quote at the start of this chapter. </ref>  This is so even if, as is usually the case, care is needed in order to use or to maximise the relief, for instance, limiting contributions each year to below the cap for the relief, or limiting benefits within the permitted limits for gift aid.
@@ Line 600: / Line 600: @@
 The Select Committee said:
 :“a further issue emerged which was not within the scope of the GAAR, but where popular perception through the media may well be that it should be tackled and the GAAR ought to be the mechanism. It is the potential for deferring bonuses so as to take advantage of a future reduction in tax rates. Mr Davies referred to it in his answer as to what was included within the GAAR and what not. Mr Gammie explained: “The reason why that [deferring the payment of bonuses] arises is because we tax earnings, generally speaking, on a receipts basis—in other words when they are actually paid—which gives you the facility to shift when you pay something from now until three months’ time, if somebody is prepared to wait for it … The reality is that you have to decide how you want to tax those things … we are talking about something which is a function of the tax base—in other words, what you are choosing to tax and how you are choosing to tax it.”
-. So ... the issue is one concerning the structure of the tax system rather than avoidance involving manipulation of loopholes in the legislation."  More analytically, the reason is that these are not examples of tax abuse (in my sense, which I take to be the same as the definition of "abusive" in the GAAR).
+. So ... the issue is one concerning the structure of the tax system rather than avoidance involving manipulation of loopholes in the legislation."  More analytically, the reason is that these are not examples of tax abuse (in my sense, which I take to be the same as the definition of "abusive" in the GAAR).<br/>
-−
 The GAAR guidance makes this point; see [[Chargeable Gains#Postpone disposal: GAAR | Postpone disposal: GAAR]]</ref> but one might infer that they disapproved none the less for that.

@@ Line 32: / Line 32: @@
 ===Avoidance/evasion distinction ===
-An avoidance/evasion distinction very similar to the present was recognised very early (and was surely self-evident at any time) but at first there was no terminology, no agreed terminology, to express it. In 1860 Turner LJ suggested evasion/contravention (where evasion stood for the ''lawful'' side of the divide).<ref>''Fisher v Brierly'' (1860) 1 de G F&J 643 at p.663.  It is a pity that this use of ''contravention'' did not catch on because it is more transparent than ''evasion''.</ref>  In 1900 the distinction was noted as two meanings of the word “evade”.<ref>''Bullivant v AG'' [1901] AC 196 at p.207:
+An avoidance/evasion distinction very similar to the present was recognised very early (and was surely self-evident at any time) but at first there was no terminology, or no agreed terminology, to express it. In 1860 Turner LJ suggested evasion/contravention (where evasion stood for the ''lawful'' side of the divide).<ref>''Fisher v Brierly'' (1860) 1 de G F&J 643 at p.663.  It is a pity that this use of ''contravention'' did not catch on because it is more transparent than ''evasion''.</ref>  In 1900 the distinction was noted as two meanings of the word “evade”.<ref>''Bullivant v AG'' [1901] AC 196 at p.207:
 :“The word ‘evade’ is ambiguous. ... there are two ways of construing the word ‘evade’: one is, that a person may go to a solicitor and ask him how to keep out of an Act of Parliament – how to do something which does not bring him within the scope of it. That is evading in one sense, but there is nothing illegal in it. The other is, when he goes to his solicitor and says, ‘Tell me how to escape from the consequences of the Act of Parliament, although I am brought within it’. That is an act of quite a different character.”</ref>  It is possible that the use of the words avoidance/evasion in the modern sense originated in the USA where it was established by the 1920s.<ref>It is found in the scholarly Sears, ''Minimising Taxes'' (1922), and can be traced to Oliver Wendell Holmes in Bullen v Wisconsin (1916) 240 US 625 at p.630.  It is regarded as basic in Hartman, ''Tax Avoidance'' (1930) which cites two textbook definitions in similar terms.  Perhaps the practice of tax avoidance began earlier in the USA; the first published work on the subject in England was Moore, ''The Saving of Income Tax Surtax and Death Duties'' (1935), the publication of which lead to the enactment of the ToA provisions.</ref>  But by 1936, at least, knowledgeable writers in the UK adopted the same terminology, and castigated those who did not:
@@ Line 78: / Line 78: @@
 The report recommended “Clearer distinctions are needed in the Government’s approach and rhetoric towards tax avoidance.”  But the Government rejected the recommendation, so this debate will continue: HMRC, “The Powers of HMRC: Treating Taxpayers Fairly (House of Lords Paper 242) Government Response” p.2
 :''https://www.parliament.uk/documents/lords-committees/economic-affairs/Govt%20HMRC%20Powers%20report%2022%20Jan%202019%20.pdf''</ref>
 ===Does avoidance merge into evasion===
@@ Line 314: / Line 316: @@
 In 1926:
-:the highest authorities have always recognised that the subject is entitled so to arrange his affairs as not to attract taxes imposed by the Crown, so far as he can do so within the law, and that he may legitimately claim the advantage of any express terms or of any omissions that he can find in his favour in taxing Acts. In so doing, he neither comes under liability ''nor incurs blame''.<ref>''IRC v Fisher's Executor''s 10 TC 302 at p.340.  If more examples are needed, which I doubt, see  ''Levene v IRC'' 13 TC 486 at p.501-502; and the well known passage from ''Ayrshire Pullman Motor Services v IRC'' (1929) set out at [[#Impact of the GAAR | Impact of the GAAR]]. By contrast to this, the often-cited passage from the notorious case of ''Duke of Westminster v IRC'' 19 TC 490 at p.590 seems rather grudging:
+:the highest authorities have always recognised that the subject is entitled so to arrange his affairs as not to attract taxes imposed by the Crown, so far as he can do so within the law, and that he may legitimately claim the advantage of any express terms or of any omissions that he can find in his favour in taxing Acts. In so doing, he neither comes under liability <u>nor incurs blame</u>.<ref>''IRC v Fisher's Executor''s 10 TC 302 at p.340.  If more examples are needed, which I doubt, see  ''Levene v IRC'' 13 TC 486 at p.501-502; and the well known passage from ''Ayrshire Pullman Motor Services v IRC'' (1929) set out at [[#Impact of the GAAR | Impact of the GAAR]]. By contrast to this, the often-cited passage from the notorious case of ''Duke of Westminster v IRC'' 19 TC 490 at p.590 seems rather grudging:
 :“Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax.”  </ref>
@@ Line 329: / Line 331: @@
 After the war, the old orthodoxy returned.  In 1965:
-:The fact that a settlement is drawn with a view to avoiding particular charging provisions is <i>neither reprehensible, nor </i>a proper ground for inclination to a conclusion that it ought to come within those or some other charging provisions ...  <ref> ''Re Kirkwood'' [1965] Ch 286 at p.327, adding:
+:The fact that a settlement is drawn with a view to avoiding particular charging provisions is <u>neither reprehensible, nor</u> a proper ground for inclination to a conclusion that it ought to come within those or some other charging provisions ...  <ref> ''Re Kirkwood'' [1965] Ch 286 at p.327, adding:
 :“If any moral criticism could be levelled at them, then the consciences of the judges of the Chancery Division, in the exercise of their discretionary jurisdiction under the Variation of Trusts Act 1958, would be in a sorry state.”</ref>
@@ Line 339: / Line 341: @@
 Likewise in 1982:
-:the fact that the purpose of the scheme was tax avoidance does not carry any implication that it was in any way reprehensible or other than perfectly honest <i>and respectable</i>.<ref><i>IRC v Burmah Oil</i> 54 TC 200 at p.220; followed in 1988 in <i>Craven v White</i> 62 TC 1 at p.196.</ref>
+:the fact that the purpose of the scheme was tax avoidance does not carry any implication that it was in any way reprehensible or other than perfectly honest <u>and respectable</u>.<ref><i>IRC v Burmah Oil</i> 54 TC 200 at p.220; followed in 1988 in <i>Craven v White</i> 62 TC 1 at p.196.</ref>
 ===Attitudes outside UK===
@@ Line 355: / Line 357: @@
 :The obligation to pay [income tax] is a legal one. Some politicians try to treat it as a moral obligation. But it is not. The citizen is bound to pay no more tax than the statute requires him to pay according to the relevant state of his affairs.
-:Consistently with this view, it has long been a principle of the law of income taxation that the citizen may so arrange his affairs as to render him less liable to pay tax than would be the case if his affairs were cast in some different form ... This is sometimes expressed as a right to avoid tax...<ref>Sir Garfield Barwick (Chief Justice of Australia 1964–81), <i>A Radical Tory</i> (1995) at p.229.</ref>
+:Consistently with this view, it has long been a principle of the law of income taxation that the citizen may so arrange his affairs as to render him less liable to pay tax than would be the case if his affairs were cast in some different form ... This is sometimes expressed as a right to avoid tax.<ref>Sir Garfield Barwick (Chief Justice of Australia 1964–81), <i>A Radical Tory</i> (1995) at p.229.</ref>
 ===Pro-avoidance rationale===
@@ Line 917: / Line 919: @@
 But we return to a conventional view in ''HMRC v Fisher'':<ref> [2023] UKSC 44 at [76].</ref>
-:t some points [HMRC] seemed to be suggesting that this degree of uncertainty about when and to whom the charge applied was a positive virtue of the drafting. The provision was, he said, designed to discourage people from moving assets abroad with a tax avoidance purpose. The problem with having a bright line is that people devise a way round it. The penal provision works better to achieve its aim if taxpayers are unable to know whether they would be caught or not. HMRC could then assess them to tax on the income of the overseas person, leaving the taxpayer to try to convince HMRC or the tribunal on appeal that they were not transferors. That is, in my judgment, an improper argument for HMRC to run. ... I agree with [the taxpayer’s] submission in response when he said that the law cannot be left in some unclear state “just to scare people”.
+:At some points [HMRC] seemed to be suggesting that this degree of uncertainty about when and to whom the charge applied was a positive virtue of the drafting. The provision was, he said, designed to discourage people from moving assets abroad with a tax avoidance purpose. The problem with having a bright line is that people devise a way round it. The penal provision works better to achieve its aim if taxpayers are unable to know whether they would be caught or not. HMRC could then assess them to tax on the income of the overseas person, leaving the taxpayer to try to convince HMRC or the tribunal on appeal that they were not transferors. That is, in my judgment, an improper argument for HMRC to run. ... I agree with [the taxpayer’s] submission in response when he said that the law cannot be left in some unclear state “just to scare people”.
 ''Is tax imposed by Parliament or HMRC?''  Increasingly the latter.<br/>

@@ Line 105: / Line 105: @@
 {| class="wikitable"
 |-
-! scope="col" style="width: 410px;text-align:left;"| '''Case'''
+! scope="col" style="width: 350px;text-align:left;"| '''Case'''
 ! scope="col" style="width: 260px;text-align:left;"| '''Topic'''
 ! scope="col" style="width: 300px;text-align:left;"| '''See para'''

@@ Line 125: / Line 125: @@
 | ''Elborne v HMRC'' [2025] UKUT 59 || Home loan scheme	||   -
 |-
-|  ''Methanex Trinidad v Inland Revenue'' [2025] UKPC 20  Treaty shopping || [[Targeted Anti-Avoidance Rules (TAARs)#Artificial: 3 examples | Artificial: 3 examples]]
+|  ''Methanex Trinidad v Inland Revenue'' [2025] UKPC 20 || Treaty shopping || [[Targeted Anti-Avoidance Rules (TAARs)#Artificial: 3 examples | Artificial: 3 examples]]
 |}

@@ Line 105: / Line 105: @@
 {| class="wikitable"
 |-
-! scope="col" style="width: 400px;text-align:left;"| '''Case'''
+! scope="col" style="width: 410px;text-align:left;"| '''Case'''
-! scope="col" style="width: 400px;text-align:left;"| '''Topic'''
+! scope="col" style="width: 260px;text-align:left;"| '''Topic'''
-! scope="col" style="width: 400px;text-align:left;"| '''See para'''
+! scope="col" style="width: 300px;text-align:left;"| '''See para'''
 |-
 | ''Davies v Hicks'' [2005] EWHC 847 (Ch) || Share pooling/matching || [[Chargeable Gains#Analysis of identification rule | Analysis of identification rule]]

@@ Line 232: / Line 232: @@
 {| class="wikitable"
 |-
-! scope="col" style="width: 400px;text-align:left;"| '''Avoidance'''
+! scope="col" style="width: 260px;text-align:left;"| '''Avoidance'''
-! scope="col" style="width: 400px;text-align:left;"| '''Counteracted by'''
+! scope="col" style="width: 260px;text-align:left;"| '''Counteracted by'''
-! scope="col" style="width: 400px;text-align:left;"| '''See'''
+! scope="col" style="width: 300px;text-align:left;"| '''See'''
 |-
 | style="vertical-align: top;" |   Transfer of assets abroad || style="vertical-align: top;" |   ToA code	 || style="vertical-align: top;" |   [[Transfer of Assets Abroad: Introduction#ToA: Introduction | ToA: Introduction]]

@@ Line 512: / Line 512: @@
 ''Estera Trust (Jersey) v Singh''<ref>[2019] EWHC 2039 (Ch).</ref> was an unfair prejudice case.  The unfairly prejudiced shareholder was a non-resident trust.  The Court ordered the company (“the defendant co”) to purchase the trust's shares.  Unfortunately that would be a distribution for tax purposes, and subject to IT at the dividend trust rate.  The trust proposed a different arrangement:
-(1)	The trust transferred the shares to a newly created company wholly owned by the trust (“Newco”)
+(1)	The trust transferred the shares to a newly created company wholly owned by the trust (“Newco”)<br/>
-−
 (2)	The defendant co purchased its shares from Newco

@@ Line 640: / Line 640: @@
 In 2021, it emerged that:
-(1)	Tony & Cheri Blair had (in 2017) incorporated a company (the purchaser).
+(1)	Tony & Cheri Blair had (in 2017) incorporated a company (the purchaser).<br/>
+(2)	The purchaser acquired a BVI property company (holding office accommodation) from an unconnected non-resident company.<br/>
 (2)	The purchaser acquired a BVI property company (holding office accommodation) from an unconnected non-resident company.
-−
 (3)	The purchaser liquidated the BVI company and so acquired the land, which was subsequently used for a trading business of Cheri Blair.
 The (suggested) avoidance here was that SDLT was not payable, which it could have been if the purchaser had acquired the land directly rather than the BVI company!<ref> The Guardian, 5 Oct 2021 “Tony and Cherie Blair bought property via offshore firm and saved £300,000 in tax”.</ref>   Of course any practitioner would understand that:
-*	The choice between a company purchase and an asset purchase is one which Parliament has allowed, is not avoidance, and is so commonplace that no-one would have expected the matter to be dealt by a company purchase.
+*	The choice between a company purchase and an asset purchase is one which Parliament has allowed, is not avoidance, and is so commonplace that no-one would have expected the matter to be dealt by a company purchase. <br/>
-−
 *	The fact that this was a ''BVI'' company was irrelevant to the SDLT saving, as (more or less) the same saving would have applied to a purchase of a UK property company.<ref> In the case of a UK company the SDLT saving would have been slightly reduced by SDRT at the rate of 0.5%.

@@ Line 967: / Line 967: @@
 | scope="row" colspan="3" style="text-align:left;"| <i>Retrospective reversal of avoidance schemes:</i>
 |-
-| DT relief for partnership || 1987 || [[Partnerships#DT relief: Partnership | DT relief: Partnership]]
+|    DT relief for partnership || 1987 || [[Partnerships#DT relief: Partnership | DT relief: Partnership]]
 |-
-| s.23 FA 2012 (loan relationships) || 2012 || ''Not discussed''
+|     s.23 FA 2012 (loan relationships) || 2012 || ''Not discussed''
 |-
 | !scope="row" colspan="3" style="text-align:left;"| <i>Provisions retrospective in effect:</i>
 |-
-| Pre-owned assets || 2004 || [[Pre-Owned Assets#Retrospectivity | Retrospectivity]]
+|     Pre-owned assets || 2004 || [[Pre-Owned Assets#Retrospectivity | Retrospectivity]]
 |-
-| IHT: former Accumulation & Maintenance trusts || 2006	 || ''Not discussed''
+|     IHT: former Accumulation & Maintenance trusts || 2006	 || ''Not discussed''
 |-
-| Disallowance of debts for IHT || 2013 || [[IHT Treatment of Debts#s.175A disallowance: Commencement | s.175A disallowance: Commencement]]
+|     Disallowance of debts for IHT || 2013 || [[IHT Treatment of Debts#s.175A disallowance: Commencement | s.175A disallowance: Commencement]]
 |}