© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
Realistic view of the facts
GENERAL
- Not about sham
"[5] It is common ground that the schemes have no business or other “real world” purpose and that their sole purpose is to avoid liability to pay business rates. But, subject to one new point, dealt with below, it is also now common ground that the leases granted to the SPVs were not shams so that, as a matter of the law of real property, they conferred an entitlement to possession upon the SPVs. An argument that the leases were shams was rejected at first instance and has not been resurrected on appeal.
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[51] We emphasise that this conclusion is not founded on the fact that the defendant’s only motive in granting the lease was to avoid paying business rates, although that was undoubtedly so. If the leases entered into by the defendants had the effect that they were not liable for business rates, their motive for granting the leases is irrelevant. Nor does it illuminate the legal issues to use words such as “artificial” or “contrived” to describe the leases, when it is now accepted that they created genuine legal rights and obligations and were not shams. Our conclusion is based squarely and solely on a purposive interpretation of the relevant statutory provisions and an analysis of the facts in the light of the provisions so construed." (Hurstwood Properties (A) Ltd v. Rossendale BC [2021] UKSC 16)
"[67] References to “reality” should not, however, be misunderstood. In the first place, the approach described in Barclays Mercantile and the earlier cases in this line of authority has nothing to do with the concept of a sham, as explained in Snook. On the contrary, as Lord Steyn observed in McGuckian at p 1001, tax avoidance is the spur to executing genuine documents and entering into genuine arrangements." (UBS AG v. HMRC [2016] UKSC 13)
- Tax avoidance is the spur to enter into genuine arrangements
"Neither the individual steps nor the composite transaction were simulated or sham transactions in the sense in which those terms are understood in contract law or trust law (see Snook v London and West Riding Investments Ltd [1967] 2 QB 786). On the contrary, tax avoidance was the spur to executing genuine documents and entering into genuine arrangements. But this appeal is concerned with a different question, namely the fiscal effectiveness of the composite tax avoidance scheme." (IRC v. McGuckian [1997] STC 908 (HoL) at 917)
- Applies to VAT
"[24]...It is nothing to the point that the present case is not about tax avoidance, or that it is about VAT rather than taxes on income or gains. This principle of statutory construction is of general effect, as Lord Drummond Young rightly observed in the Inner House, at para 13." (Balhousie Holdings Ltd v. HMRC [2021] UKSC 11)
REALISTIC VIEW
- Look for the real reason for a payment, not just what the documents say
"[62] We have decided that the FTT was correct in its construction of section 225 ITEPA 2003. The payments had to be for the restrictive undertakings. This requires the court to consider the “real reason” for the payment. This question cannot be approached as one purely of construction of the deed. The critical question is: “What is the reality?”, and not simply, “What does the deed say?” " (The First de Sales Limited Partnership v. HMRC [2018] UKUT 396 (TCC), Carr J and Judge Sinfield)
- Purchaser would not have agreed to price for right to dividends unless certain as to what dividend was going to be declared
"In the Court of Appeal Carswell LJ said ([1994] STC 888 at 921) that 'in theory at least, the directors could have decided to declare higher or lower dividends than those expected by the assignors and assignee'. That cannot be right. Mallardchoice would not have agreed to pay Ir£396,054 for a dividend unless there was certainty that it was going to be paid. There is only one reasonable interpretation of the primary facts: the four steps were inextricably limited as parts of a single composite transaction." (IRC v. McGuckian [1997] STC 908 (HoL) at 917)
- Exclusion from trust irrelevant if benefit actually provided
"[32] We are not persuaded that the fact that there was an exclusion of benefit clause in both Trusts carries any weight. Fine words butter no parsnips, and in this case our view is that, as a matter of fact, there was a clear benefit to the deceased from both Trusts. Whilst that might give someone a cause of action against someone else, it does not affect our tax analysis." (Chugtai v. HMRC [2025] UKFTT 458 (TC), Judge Popplewell)
- Transfer of value by company treated as attributable to bonus for employee even though transfer made to trust
"[61] The second answer follows from HMRC's submission, which we accept, that we should view the transactions realistically. We find from the evidence, including the minutes of the meeting on 20 April 2012, the minutes of the meeting at 2.30pm on 23 November 2012, and Ms Tonkin's witness statement and oral evidence, that the Company's intention in implementing the scheme was to provide Ms Tonkin with a bonus. The transfer to Ms Tonkin had real and lasting consequences for her, in that once the transactions had been implemented, the Company owed her £740,000, which was credited to her director's loan account.
[62] HMRC's position is that viewed realistically, the transfer of value was from the Company to the Trustee. We note that what the Trustee received under the transactions was a promise by Ms Tonkin to pay £740,100 in ten years' time, and that more than 12 years later this payment has not been made, nor has the Trustee taken any steps to recover this debt. On this basis we do not accept that it is more realistic to view the transfer of value from the Company as having been made to the Trustee rather than to Ms Tonkin.
[63] HMRC are also in the uncomfortable position of taking a different position in relation to inheritance tax from that which they took for income tax, as set out in their letter of 29 June 2017. This states that "HMRC's primary position is that the Scheme results in payment of earnings to the employees from the employer in the form of either money or money's worth, in the form of gold"." (Tonkin v. HMRC [2025] UKFTT 750 (TC), Judge Gauke)
- Board resolution of sole director company restricting sole director from private use of vehicle accepted as restriction on such use
"[9] The tribunal heard evidence from Mr Phillips, whom it accepted as a witness of truth. It found that the car was purchased for business use and also that the company and Mr Phillips intended to be bound by the board resolution (decision paras 10 and 11).
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[40] In the present case the prohibition was backed up by the terms of Mr Phillips' employment and in addition the arrangements as to the location of the keys. The tribunal accepted Mr Phillips' evidence that he intended to be bound by the terms of the board resolution prohibiting from using the car for private use. There is no doubt that a company can enter into a binding employment contract with its sole director, even where that director is also the controlling shareholder: see Lee v Lee's Air Farming Ltd [1961] AC 12, a decision of the Privy Council. Mr Paines contends that the restrictions are worthless in this case because they can be revoked at any time by Mr Phillips and would be automatically revoked if he were to use the car for private purposes. The first part of that submission is not open to Mr Paines in the light of the tribunal's findings to which I have referred. As to the latter part of that submission, the question whether the restrictions are revoked would depend on what should be inferred to be the intention of the company in that situation. It would not necessarily follow that the intention of the company would be to lift the restrictions rather than to enforce any remedy for breach." (CEC v. Elm Milk Limited [2006] EWCA Civ 164, Arden LJ)
- Board resolution of sole director company restricting sole director which was not intended to be acted upon would be ignored
"[23] If the tribunal had found that the resolution was never intended to be acted upon, but was merely a piece of window dressing aimed at Customs and Excise, the tribunal would no doubt have dismissed the appeal. A further appeal from a decision of that sort by Elm Milk to this Court would have had little chance of success. But in my judgment the same is true in reverse where, as happened in this case, the tribunal found that the resolution was genuine and was properly to be taken into account in determining the value added tax effects of Elm Milk's acquisition of the car. I set out my own analysis and views in more detail in the following paragraphs." (CEC v. Elm Milk Ltd [2005] EWHC 366 (Ch), Park J, approved CEC v. Elm Milk Limited [2006] EWCA Civ 164, §34, Arden LJ)
- Contractual restriction on private use of car by employee would be respected if genuine and not colourable
"[27] What, however, is the position in an employer and employee case where the employer provides the car on terms that the employee may use it for business purposes only and may not use it for private purposes? In my judgment, provided that those contractual terms are genuine in all respects, 'the relevant condition' referred to in art 7(2)(a)(iii) is satisfied and, assuming that all other requirements that input tax recovery are also fulfilled, the employer is entitled to recover the input tax included in the price of the car. The requirement which the employer must fulfil in order not to fall foul of art 7(2G)(b) is that, at the time when the employer acquires the car, he must not intend to make it available for the employee's private use. If he intends to provide it to the employee subject to a contractual stipulation that the employee may not use it privately, and if that contractual stipulation is genuine and not colourable, it seems to me that the requirement is met. At the very least, it is open to a tribunal to find that it is met.
[28]...However, I do not accept that, in the absence of such physical arrangements, art 7(2G)(b) is always going to prevent the employer from recovering the input tax. If an employer trusts his employees to observe a contractually binding condition, then surely he (the employer) can say that he does not intend to make the car available to be used in a way which would involve a breach of the condition..." (CEC v. Elm Milk Ltd [2005] EWHC 366 (Ch), Park J, approved CEC v. Elm Milk Limited [2006] EWCA Civ 164, §34, Arden LJ)
- Close scrutiny of whether contractual condition between family company and director who is member of family
"[31] Hitherto in the foregoing discussion I have tended to concentrate on a hypothetical case of an employer and an employee with no other connection between them. Does it make any difference if the employer is a small family company and the employee is both a member of the family and the sole director of the company? Those are, of course, the actual facts of this case. In my judgment, that does not affect the principle of the matter. If, as I believe, a genuine contractual stipulation against private use of a company car can overcome the obstacle of art 7(2G)(b) as between an employer and an otherwise unconnected employee, then it can equally overcome the obstacle of the paragraph as between a family company and a director who is a member of the family.
[32] I certainly accept that, in that latter situation, the facts may require close scrutiny to ascertain whether the contractual stipulation is genuine. However, in this case they received close scrutiny..." (CEC v. Elm Milk Ltd [2005] EWHC 366 (Ch), Park J, approved CEC v. Elm Milk Limited [2006] EWCA Civ 164, §34, Arden LJ)
- Condition imposed by director of family company precisely in order to satisfy tax test found to be genuine and effective
"[11] These findings are, we recognize, based on a board resolution made by Mr Phillips in relation to his own activities. We also recognize that Elm Milk is a company controlled by Mr Phillips' family. And we recognize that the resolution would not have been made in the absence of Article 7 of the 1992 Order. We have however had the opportunity of hearing evidence from Mr Phillips and considering his replies in the course of cross-examination. Our conclusion is that Elm Milk and Mr Phillips intended to be bound by the terms of the Resolution. Both parties well understood that the condition they had to adhere to, to enable input tax relief to be obtained, was that the Mercedes motor car was not to be made available by Elm Milk for the private use of anyone. By making that resolution Elm Milk was committed and Mr Phillips was committed, both in good faith, to a course of conduct that precluded Elm Milk from making the motor car available to Mr Phillips for private use and Mr Phillips from using it for private use. Mr Phillips, we are satisfied, became contractually bound to Elm Milk by reason of that resolution not to use the Mercedes motor car for private use." (Elm Milk Limited v. CCE [2004] UK V18592, Judge Oliver QC quoted and relied in CEC v. Elm Milk Ltd [2005] EWHC 366 (Ch), §33, Park J, in turn approved CEC v. Elm Milk Limited [2006] EWCA Civ 164, §34, Arden LJ)
- Contemplation of things that might happen in unlikely, emergency situation not affecting intention
"[29] I also consider that the employer would meet the requirement of not intending to make the car available for private use by the employee even if the employer might, perhaps under pressure, acknowledge the possibility that an employee might, in exceptional circumstances, break the contractual condition. In this case Mr Phillips had said to an officer of Customs and Excise that, if an unforeseen emergency had arisen at a time when his wife's Rover was not available, he might have used the Mercedes. He added that in that situation a hire charge would be made by Elm Milk for the private use of the car. The tribunal thought that that was 'a bit far fetched.' So do I. Realistically, whether in the actual case of Elm Milk and Mr Phillips, or in a hypothetical case of any employer and employee with a contractual inhibition or use for private purposes, use for a non-business purpose in a genuine emergency situation would be a breach of the condition, but few reasonable employers would do anything about it.
[30] The important point, in my view, is this. The question is not whether it is possible to imagine any circumstances, however exceptional, in which the car might be used for a private purpose, despite a contractual condition that it should not be so used. The question is whether, at the time when the employer purchases the car, he intends to make it available to the employee for private use. If the employer's intention is to make it available to the employee for business use and subject to a contractual prohibition of private use, and if the employer genuinely intends the prohibition to mean what it says, then in my judgment, the case is, from the taxpayer's point of view, on the right side, not the wrong side, of art 7(2G)(b)." (CEC v. Elm Milk Ltd [2005] EWHC 366 (Ch), Park J, approved CEC v. Elm Milk Limited [2006] EWCA Civ 164, §34, Arden LJ)
Scintilla temporis arguments not having a powerful grasp on reality
“It is a curious feature of this case that both sides claim that their views reflect the reality and not the mere form of this transaction. But the Revenue’s version of reality seems entirely dependent upon the scintilla temporis which must elapse between the convey- ance of the freehold to the donee and the creation of the leasehold interest in favour of the donor. For my part, I do not think a theory based upon the notion of a scintilla temporis can have a very powerful grasp on reality...The need for a conveyance to be followed by a lease back is a mere matter of conveyancing form. As I have said, she could have reserved a life interest by a unilateral disposition. Why should it make a difference that the reservation of a term of years happens to require the participation of another party if the substance of the matter is that the property will pass only subject to the lease?" (Ingram v. IRC [1999] STC 1234)
- However
"[43] Even if the substance is ignored, and the transaction looked at merely as a matter of equitable mechanics, the appellants' case does not get them home. As both Nugee and Males LJJ explained in the Court of Appeal ( [2024] Ch 1 ), the VPCT was the mechanism by which Inc's equitable interest in each of Shares 1 and 2 reached Mr Bell and Mr Lyampert. Only when it became vested in each of them did their status as sole trustees of each share lead to the result that the equitable interest merged in the legal title. It is fair to say that, because immediate consideration for the sale was achieved by the 2010 Agreement, the VPCT had only a momentary existence, occupying what the appellants called a scintilla temporis. But I agree with the Court of Appeal that this is no obstacle to the recognition of a VPCT in this context." (Frenkel v. LA Micro Group (UK) Ltd [2024] UKSC 42)
Realistic view of whether statutory concept satisfied
- Tax operates in the real world: usually concerned with 'real' gains and losses etc.
"[37]...vii) Both interpretation and application share the need to avoid tunnel-vision. The particular charging or exempting provision must be construed in the context of the whole statutory scheme and the identification of its purpose may require a wider view, including the history of the provision or scheme and its political or social objectives, to the extent these can reliably be ascertained (para 16).
viii) Likewise the facts must be looked at in the round. It was the formalistic insistence on examining steps in a composite scheme separately that allowed tax avoidance schemes to flourish (para 17).
ix) Tax operates "in the real world, not that of make-belief" (Ramsay at page 326D) and therefore where legislation employs a concept such as a gain or a loss, it is likely to mean a real gain or a real loss rather than one that is illusory in the sense of not changing the overall economic position of the parties to a transaction (see Ramsay at page 326E-327A; see also Altrad Services Limited and another v HMRC [2024] EWCA Civ 720 at para 40).
x) There can, however, be no "substitute for a close analysis of what the statute means" (Barclays at [38]); "it all depends on the construction of the provision in question" (UBS at para 65).
xi) The distinction between commercial and legal concepts, while "not an unreasonable generalisation", was not intended to provide a substitute for a close analysis of what the statute means. It does not justify the assumption that an answer can be obtained by classifying all concepts a priori as either commercial or legal. That would be the negation of purposive construction (para 56)." (Watts v. HMRC [2025] EWCA Civ 1615, Miles, Lewison, Arnold LJJ)
- Even where concept such as loss is defined, elements to be construed purposively as looking at real world
"[45] The appellant's second criticism was that in para 52 of Berry Lewison J failed to recognise that the concept of "loss from the discount on a strip" was defined in sub-paragraph (3) as involving two inputs. In other words that there was a statutory formula. There is some force in this criticism but, as the UT explained in the present case, the inputs themselves are required to be construed in accordance with the Ramsay approach. I agree with the UT's analysis on this point.
[46] Moreover, the substantial point made by Lewison J in para 52 of Berry was that the purpose of paragraph 14A is to allow a taxpayer to claim relief where he has suffered a real commercial loss as a result of transactions in gilt strip. I agree with that conclusion. The statutory provision is concerned with transactions having real world economic effects. This is shown by the subject matter and wording of the provision. It refers to gilt strips (a recognised form of traded security), uses the concepts of transfer and redemption (both being ways of realising or disposing of value), and refers to "the amount paid for" a strip and "the amount payable on transfer or redemption", both economic values. Applying the guidance set out above, Parliament must therefore be taken to have intended that the concept of loss and the inputs to the formula for its calculation are concerned with the identification of real losses. Adapting the words of Lord Wilberforce in Ramsay, the provision is concerned with the real world, not that of make-believe, and tax relief is to be allowed on actual losses, not on arithmetical differences. I therefore agree with the description of the purpose of paragraph 14A given in Berry." (Watts v. HMRC [2025] EWCA Civ 1615, Miles, Lewison, Arnold LJJ)
- Legislation being concerned with deemed losses on some occasions does not mean it recognises artificial losses on others
"[47] In reaching this conclusion I am unpersuaded by Ms Nathan's argument that the deeming provisions in paragraph 14(4), which are incorporated by paragraph 14A(4), show that paragraph 14A as a whole is not concerned with real world transactions, but is a self-contained code capable of yielding artificial losses. The fact that there may be deemed to be a loss (or gain) for a deemed transfer where the taxpayer holds the strip on the 5th April in a year of assessment to my mind throws no relevant light on how the loss calculation is to be carried out in the case of an actual transfer under paragraph 14A(3)." (Watts v. HMRC [2025] EWCA Civ 1615, Miles, Lewison, Arnold LJJ)
- Legislation concerned with events that have enduring consequences in the real world
"[80]...Of course, these indications are in no way conclusive, but they do in my view support an inference that the section is in general concerned with events that have enduring consequences in the real world, and so affect the practical use of the asset made by the taxpayer in his trade. Moreover, this is no more than common sense would suggest in a context designed for operation by traders in the real world.
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[83] The question which must therefore be answered is whether, as a matter of ordinary language, and in a real and practical sense, the taxpayers ceased to own the assets which they sold to the Bank as step 1 in the scheme. In answering that question, it is elementary that the scheme must be regarded as a whole, and as it was intended to operate..." (HMRC v. Altrad Services Limited [2024] EWCA Civ 720, Henderson, Nugee, Whipple LJJ)
- Brief interruption of legal ownership as part of tax scheme not loss of ownership for purposes of legislation
"[85] Another way of expressing my conclusion would be to say that, on its true construction, section 61(1)(a) was intended by Parliament to operate in the real world of commerce, with the consequence that a brief interruption of the taxpayer's legal ownership of the assets, brought about solely by the scheme and devoid of any commercial purpose apart from tax avoidance, falls outside the scope of the statutory language, and the intermediate steps may therefore be disregarded. So viewed, the case is a good example of the type recognised by Ribeiro PJ in Arrowtown at [35]: see [6] above. It also falls comfortably within the principles stated by the Supreme Court in Rossendale at [11] and [12], quoted in [39] above. If the steps in the scheme are to be disregarded, the end result is that for the purposes of capital allowances the ownership of the assets remained throughout vested in the taxpayers...
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[91] By parity of reasoning, it may be said that, in the present case, the taxpayers did cease for a short period to be the legal and beneficial owners of the assets which they sold to the Bank at the start of the scheme, but that this does not preclude an analysis which looks at the scheme as a whole and concludes that the taxpayers did not, in any real or practical sense, cease to own the assets within the meaning of section 61(1)(a) during the three weeks while the scheme ran its course. There is nothing about the concept of cessation of ownership which positively requires the normal and narrower meaning of the concept to prevail from the moment when the initial sale was completed, even though the sale formed an integral part of a composite transaction designed to return the assets to the full legal and beneficial ownership of the taxpayers three weeks later." (HMRC v. Altrad Services Limited [2024] EWCA Civ 720, Henderson, Nugee, Whipple LJJ)
- Whether person "made available" answered in a "real and practical sense"
[77] The simple questions for the FTT were whether, as a matter of ordinary language, and in a real and practical sense, the effect of the scheme "made available" the personal services of the employees to the appellant and whether those services were then "rendered" for the purposes of the appellant's business. In answering those questions, the FTT was required to regard the scheme as a whole and as it was intended to operate. That was all that the FTT was required to do." (Bilfinger Salamis UK Limited v. HMRC [2026] UKUT 143 (TCC), Judges Aleksander and Andrew Scott)
- Existence of 'payment' depends on practical, business reality, including any composite transaction
"[82]...The question whether a "payment" is made for these purposes should be answered by looking at the practical, business reality of the transaction, including any composite transaction of which the payment forms part. If the intended purpose and effect of the transactions is that money leaves the scheme and is placed at the free disposal of the member, the mere fact that the money may be subject to an equitable obligation to restore it to the scheme will not prevent it from being a "payment" in the ordinary sense of that word. To conclude otherwise would deprive the charge to tax of effect in many of the most egregious cases where it is most needed." (Clark v. HMRC [2020] EWCA Civ 204, Henders, Bean, Nicola Davies LJJJ)
- Circular flow of funds under pre-ordained transactions not income for tax purposes
"[139] In our case it is not disputed that the arrangements entered into by the Partners and the Partnership in respect of the Licence Fees formed a circular scheme which the FTT found to be a self-cancelling financing arrangement. We have also been able to trace clearly how the amounts borrowed by the individual Partners from BOS were, via acquisition of the Licence Fees, used to repay principal and interest on those borrowings.
[140] As a matter of economic reality, as [the Taxpayer] has pointed out, in this part of the Scheme nothing has really happened - money had been borrowed and that money is passed back to repay the borrowing.
[141] On first principles, and applying the basic "fruit and branch" analogy referred to by Launcelot Henderson in BlueCrest - there is no "fruit" for the individual partners
[142] We do not consider therefore that the arrangement gives rise to income. As Mr Bremner has submitted - the circular flow of funds does not answer to the description of income for tax purposes." (Vaccine Research Limited partnership v. HMRC [2025] UKFTT 402 (TC), Judge Tilakapala)
DISREGARD THE ARTIFICIAL
- Tax advantage motive does not make contractual arrangements artificial
"[57] For the reasons set out in paras 36-44 above, I consider that the contractual documentation supports the notion that Med was an intermediary, and, in the light of the discussion in paras 45-50 above, it seems to me that "economic reality" does not assist a contrary view. Further, one aspect of economic reality is that it is the hotelier, not Med, who owns the accommodation and it is the customer, not Med, to whom it is ultimately supplied: that does not, of course, prevent the hotelier supplying the accommodation to Med for supply on to the customer, but it makes it hard to argue that Med's analysis that it is no more than an agent is contrary to economic reality. Further, one must be careful before stigmatising the contractual documentation as being "artificial", bearing in mind that EU law, like English law, treats parties as free to arrange or structure their relationship so as to maximise its commercial attraction, including the incidence of taxation – see RBS Deutschland, cited in para 24 above." (Secret Hotels2 Ltd v. HMRC [2014] UKSC 16)
- Artificial: abnormal features that appear to be part of a plan as compared to a normal transaction of an ostensibly similar type
"[22] As Lord Diplock indicates, context is very important. In relation to a natural, tangible object (such as silk, or leather, or even a human limb) it is not a matter of degree: either an object is artificial, or it is not. But a transaction is an abstract construct. Every transaction is in a sense artificial in that it is put together by two or more parties in order to create or alter legal rights and obligations as between them. While mindful of Lord Diplock's warning against too much judicial exegesis the Board consider that in this context a transaction is "artificial" if it has, as compared with normal transactions of an ostensibly similar type, features that are abnormal and appear to be part of a plan. They are the sort of features of which a well-informed bystander might say, "This simply would not happen in the real world." Recognising a transaction as artificial in this sense is an evaluative exercise calling for legal experience and judgment. It is certainly not an ordinary question of primary fact, as Mr McCall acknowledged in abandoning one of the main points in his written case.
[23] A transaction is not artificial merely because it is not commercial, or not fully commercial. Income tax affects transactions by way of bounty as well as commercial transactions. But if a transaction effected in a commercial context is attacked as uncommercial that may be a reason for looking at it closely. To repeat what Lord Diplock said in the passage quoted above, it is necessary to examine the particular transaction and the circumstances in which it was made and carried out." (Commissioner of Taxpayer Audit v. Cigarette Company of Jamaica Limited [2012] UKPC 9)
- Liability created for IHT avoidance purposes not ignored
"[134] That evidence appears to have been accepted by the FTT. The FTT found that despite the events which have occurred the parties involved in implementing the scheme intended to comply with the terms of the documents implementing the scheme at the time when the scheme documents were executed (FTT[26(1)]) and the true legal effect of the scheme documents was in accordance with their form and they gave rise to the rights and obligations set out in them (FTT[76]). A consequence of this is that the Note gave rise to a debt on the part of the Life Trustees and the Life Trustees still have an outstanding obligation to discharge the Note in accordance with its terms and the Family Trustees still have an entitlement to receive the proceeds of that discharge (FTT[78]).
[135] We do not accept Mr Davey's submission that these facts represent an unusual case such that the liability represented by the Note should not be deducted when valuing the property to which Mrs Elborne is treated as beneficially entitled. The language and statutory context of s49(1) does not support this submission, and IHTA 1984 includes specific provisions for the disallowance of certain liabilities, eg s103. Moreover, whilst in Rossendale Lord Briggs and Lord Leggatt referred to the SPVs as having no real or practical ability to exercise their legal right to possession, and to that legal right having been conferred for no purpose other than the avoidance of liability for rates, in the present case the FTT made findings as to the Note giving rise to a debt and there was no finding as to the purpose of the Life Trustees in issuing the Note on its particular terms." (Elborne v. HMRC [2025] UKUT 59 (TCC), Judges Zaman and Tilakapala)
- Transactions may be treated differently depending on motive
"[94] I should also comment briefly on the UT's point that there is something rather odd about HMRC arguing for an interpretation of section 61(1)(a) which makes the provision less, rather than more, likely to apply: see [62] above. I think there are two answers to this. The first is that the misplaced ingenuity of the designers of tax avoidance schemes often seeks to exploit legislative provisions in a way that might at first seem counter-intuitive. The second is that the construction for which HMRC contend will not apply in normal cases which are not exclusively driven by tax avoidance motives, and there cannot in my judgment be any objection in principle to a construction which merely reflects the underlying practical reality of a circular scheme which leaves the taxpayer in all essentials where he started." (HMRC v. Altrad Services Limited [2024] EWCA Civ 720, Henderson, Nugee, Whipple LJJ)
- Disregard of condition attached to bonus having no commercial purpose/motive
"[14]...(5) there was no business or commercial purpose for the insertion of the condition in the case of each Bonus. That condition was commercially irrelevant and its purpose was solely to secure that the interest in the relevant Loan Notes fell within 1998 legislation.
In relation to this question, Mr Sherry, who was appearing before us on behalf of the Appellant, submitted at the hearing that a distinction could be drawn in this case between motive and purpose, at least in the context of the Second Loan Notes. He said that:
(a) the "purpose" of a provision was what it would do and why it would do it and that was different from the "motive" underlying the insertion of the provision; and
(b) whilst there may not have been a business or commercial motive for the insertion of the condition in relation to the Second Loan Notes, the condition nevertheless had a business or commercial purpose in that CP's death within the relevant conditionality period would have resulted in the Loan Notes passing back to the Appellant and that would have made sense commercially in that CP was the driving force behind the Appellant and his death would undoubtedly have damaged the Appellant's business and profitability.
This submission is the same as the one which Mr Sherry made in Cyclops Electronics Ltd and another v The Commissioners for Her Majesty's Revenue and Customs [2018] UKUT 7 (TCC) ("Cyclops"), an Upper Tribunal case relating to the 2003 legislation which we discuss later in this decision, as recorded in Cyclops at paragraphs [62] to [65].
We are not persuaded by it for similar reasons to those recorded by the Upper Tribunal in Cyclops when commenting on the First-tier Tribunal's decision in that case - see Cyclops at paragraphs [67] to [69]. In short, we have been provided with no evidence to the effect that the purpose of the condition in the case of the 2003 Bonus was to ensure that the Second Loan Notes reverted to the Appellant in the event of CP's death within the conditionality period or evidence as to why that was desirable from the commercial perspective. We accept that CP's death within the conditionality period would have had a meaningful commercial effect but, as the Upper Tribunal noted in Cyclops, effect is not the same as purpose.
This conclusion is not very different from our conclusion in paragraph 14(4) above to the effect that the creation and funding of PIL as part of the proposals to pay the Bonuses did not form part of the purpose of CP and the Appellant in entering into the proposals. That too was something which had a meaningful commercial effect but it could not be said to amount to a purpose in entering into the proposals;
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[75] It follows from this that we can see no basis on which to distinguish the purposive construction of the condition-related language in the 2003 legislation which was adopted by the Supreme Court in UBS from the purposive construction of the condition-related language in the 1998 legislation in which we are now engaged and therefore that, on a purposive construction of that language, a commercially irrelevant condition which has been inserted solely to bring an award within the ambit of the 1998 legislation does not fall within the scope of that legislation. " (Lynx Forecourt Limited v. HMRC [2024] UKFTT 278 (TC), Judge Beare)
- Remote, commercially irrelevant obligation on employee to pay disregarded
"[119] As we have found above, whilst the Scheme documentation sets out three circumstances in which the Payment was required to be returned our findings of fact confirm:
(1) The likelihood of a call being made on three months notice was considered remote and unlikely by both AC and GW; it was considered "commercially irrelevant".
(2) The risk of liquidation of the Appellants was a remote possibility and a risk that the Employees were prepared to take;
(3) Where the cessation of employment triggered the call, it was not enforced by either Appellant. The Appellants are unconnected otherwise than through their use of the Scheme but in both cases the call was not enforced when triggered.
[120] We find that the Appellants is misconceived on the certainty of the obligation to pay up the uncalled Shares and the three circumstances triggering repayment were remote, commercially irrelevant or unenforced in practice.
...
[142] As stated at paragraph x above, we found as fact that the liability to pay up the uncalled amount was commercially irrelevant contingency and that the parties proceeded on the basis that it should be disregarded. We are clear in our view that, applying a purposive view of the legislation to the facts viewed realistically leads to the clear conclusion that the Payments were payments of earnings to the Employees which are taxable under s9 ITEPA and s6 SSCBA." (GW Martin & Co Limited v. HMRC [2025] UKFTT 1147 (TC), Judge Williams)
- Transaction not appreciably affecting beneficial interest disregarded
"[40] I would emphasise in particular (a) the express recognition by the Supreme Court in [11] that "The result of applying the purposive approach to fiscal legislation has often been to disregard transactions or elements of transactions which have no business purpose and have as their sole aim the avoidance of tax", and (b) the explanation given for this, namely that "it is not generally to be expected that Parliament intends to exempt from tax a transaction which has no purpose other than tax avoidance". Furthermore, the quotation in [11] of part of the "celebrated passage" from the judgment of Judge Learned Hand in the Gilbert case suggests to me that the court wished to endorse that eminent American judge's reasoning that "we cannot suppose that it was part of the purpose of the Act to provide an escape from the liabilities that it sought to impose" as well as the preceding proposition that "If … the taxpayer enters into a transaction that does not appreciably affect his beneficial interest except to reduce his tax, the law will disregard it" (which was cited by Lord Wilberforce in Ramsay itself [1982] AC 300, 326). It seems to me that the Supreme Court here comes close to enunciating a general principle which should be applied to the interpretation of all United Kingdom tax legislation, although it is also necessary to heed the warning of Lord Wilberforce in Ramsay at 327 that "It is probable that the United States courts do not draw the line precisely where we, with our different system, allowing less legislative power to the courts than they claim to exercise, would draw it …"." (HMRC v. Altrad Services Limited [2024] EWCA Civ 720, Henderson, Nugee, Whipple LJJ)
- Brief cessation of legal ownership devoid of commercial purpose fell outside statutory language
"[86] Another way of expressing my conclusion would be to say that, on its true construction, section 61(1)(a) was intended by Parliament to operate in the real world of commerce, with the consequence that a brief interruption of the taxpayer's legal ownership of the assets, brought about solely by the scheme and devoid of any commercial purpose apart from tax avoidance, falls outside the scope of the statutory language, and the intermediate steps may therefore be disregarded. So viewed, the case is a good example of the type recognised by Ribeiro PJ in Arrowtown at [35]: see [6] above. It also falls comfortably within the principles stated by the Supreme Court in Rossendale at [11] and [12], quoted in [39] above. If the steps in the scheme are to be disregarded, the end result is that for the purposes of capital allowances the ownership of the assets remained throughout vested in the taxpayers. [Counsel for the taxpayer] helpfully confirmed in his oral submissions to us that, on this hypothesis, there was nothing upon which the scheme could operate, and it therefore had to fail." (HMRC v. Altrad Services Limited [2024] EWCA Civ 720, Henderson, Nugee, Whipple LJJ)
- No real beneficial entitlement to interest where no real benefit to receiving it as part of tax scheme
"[70] The FTT accepted that Houmet did not act as a trustee, but rightly concluded that that was not enough for Hargreaves to succeed. Hargreaves was unable to establish that, viewed realistically, the transactions conferred any benefit of an entitlement to the interest. There was no evidence to suggest that Houmet could have used the funds received for any other purpose, or that it could benefit from them in any other manner. There was no indication that it derived any meaningful margin or other profit from its participation in the arrangements. Further, Houmet's involvement was entirely ephemeral, being confined to successive assignments of interest very shortly before the loans in question were repaid. There is no suggestion that Houmet was either at risk as to the amount that might be paid, such that it might not be put in funds to pay for the assignment to it, or that it might be able to benefit from the receipt being higher than anticipated. On the former point (risk), I note that the terms of the assignments to Houmet are unknown, the evidence being limited to notices of assignment and demands for the interest (see para. 16(12) of the FTT's decision). It was therefore not established that Houmet's obligation to pay for the assignment was an unconditional one, rather than being entirely dependent on, and co-extensive with, the receipt of the interest.
[71] As a result, Hargreaves could not demonstrate that Houmet had any of the benefits that might be derived from any entitlement to, or receipt of, the interest. The fact that Houmet no doubt used (or was treated by the parties as using) the interest to pay for the assignment is, in the circumstances of its entirely tax-motivated and artificial involvement which was not demonstrated to give rise to any risk or meaningful reward, not sufficient to answer the statutory description in s.933.
[72] Parliament cannot be taken to have intended that the exception in s.933 should extend to a company in the position of Houmet, which was involved on an ephemeral basis by way of steps that were entirely tax-motivated, and which has not been established as having benefited in any real sense from the interest that it paid away. Houmet's involvement not only had no commercial purpose but had no practical or real effect." (Hargreaves Property Holdings Limited v. HMRC [2024] EWCA Civ 365, Falk, Jackson, Nugee LJJ)
OVERALL EFFECT
Look at overall effect and disregard artificial steps
"[11] The result of applying the purposive approach to fiscal legislation has often been to disregard transactions or elements of transactions which have no business purpose and have as their sole aim the avoidance of tax. This is not because of any principle that a transaction otherwise effective to achieve a tax advantage should be treated as ineffective to do so if it is undertaken for the purpose of tax avoidance. It is because it is not generally to be expected that Parliament intends to exempt from tax a transaction which has no purpose other than tax avoidance. As Judge Learned Hand said in Gilbert v C om missioner of Internal Revenue (1957) 248 F 2d 399, 411, in a celebrated passage cited (in part) by Lord Wilberforce in Ramsay [1982] AC 300, 326:
“If … the taxpayer enters into a transaction that does not appreciably affect his beneficial interest except to reduce his tax, the law will disregard it; for we cannot suppose that it was part of the purpose of the Act to provide an escape from the liabilities that it sought to impose.”
See also Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46, paras 112-113 (Lord Millett NPJ).
[12] Another aspect of the Ramsay approach is that, where a scheme aimed at avoiding tax involves a series of steps planned in advance, it is both permissible and necessary not just to consider the particular steps individually but to consider the scheme as a whole. Again, this is no more than an application of general principle. Although a statute must be applied to a state of affairs which exists, or to a transaction which occurs, at a particular point in time, the question whether the state of affairs or the transaction was part of a preconceived plan which included further steps may well be relevant to whether the state of affairs or transaction falls within the statutory description, construed in the light of its purpose. In some of the cases following Ramsay, reference was made to a series of transactions which are “pre-ordained”: see eg Inland Revenue Comrs v Burmah Oil Co Ltd [1982] STC 30, 33 (Lord Diplock); Furniss v Dawson [1984] AC 474, 527 (Lord Brightman). As a matter of principle, however, it is not necessary in order to justify taking account of later events to show that they were bound to happen - only that they were planned to happen at the time when the first transaction in the sequence took place and that they did in fact happen: see Inland Revenue Comrs v Scottish Provident Institution [2004] UKHL 52; [2004] 1 WLR 3172, para 23, where the House of Lords held that a risk that a scheme might not work as planned did not prevent it from being viewed as a whole, as it was intended to operate.
...
[49] In our view, Parliament cannot sensibly be taken to have intended that “the person entitled to possession” of an unoccupied property on whom the liability for rates is imposed should encompass a company which has no real or practical ability to exercise its legal right to possession and on which that legal right has been conferred for no purpose other than the avoidance of liability for rates. Still less can Parliament rationally be taken to have intended that an entitlement created with the aim of acting unlawfully and abusing procedures provided by company and insolvency law should fall within the statutory description." (Hurstwood Properties (A) Ltd v. Rossendale BC [2021] UKSC 16)
"[64] This approach has proved to be particularly important in relation to tax avoidance schemes as a result of two factors identified in Barclays Mercantile at para 34. First, “tax is generally imposed by reference to economic activities or transactions which exist, as Lord Wilberforce said, ‘in the real world’”. Secondly, tax avoidance schemes commonly include “elements which have been inserted without any business or commercial purpose but are intended to have the effect of removing the transaction from the scope of the charge”. In other words, as Carnwath LJ said in the Court of Appeal in Barclays Mercantile, [2002] EWCA Civ 1853; [2003] STC 66, para 66, taxing statutes generally “draw their life-blood from real world transactions with real world economic effects”. Where an enactment is of that character, and a transaction, or an element of a composite transaction, has no purpose other than tax avoidance, it can usually be said, as Carnwath LJ stated, that “to allow tax treatment to be governed by transactions which have no real world purpose of any kind is inconsistent with that fundamental characteristic.” Accordingly, as Ribeiro PJ said in Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 52; (2003) 6 ITLR 454, para 35, where schemes involve intermediate transactions inserted for the sole purpose of tax avoidance, it is quite likely that a purposive interpretation will result in such steps being disregarded for fiscal purposes. But not always.
[65] As was noted in Barclays Mercantile at para 35, there have been a number of cases since Ramsay in which it was decided that elements inserted into a transaction without any business or commercial purpose did not prevent the composite transaction from falling within a charge to tax, or bring it within an exemption from tax, as the case might be. Examples include Inland Revenue Comrs v Burmah Oil Co Ltd 1982 SC (HL) 114, Furniss v Dawson [1984] AC 474, Carreras Group Ltd v Stamp Comr [2004] UKPC 16; [2004] STC 1377, Inland Revenue Comrs v Scottish Provident Institution and Tower M Cashback LLP 1 v Revenue and Customs Comrs [2011] UKSC 19; [2011] 2 AC 457. In each case the court considered the overall effect of the composite transaction, and concluded that, on the true construction of the relevant statute, the elements which had been inserted without any purpose other than tax avoidance were of no significance. But it all depends on the construction of the provision in question. Some enactments, properly construed, confer relief from taxation even where the transaction in question forms part of a wider arrangement undertaken solely for the purpose of obtaining the relief. The point is illustrated by the decisions in MacNiven v Westmoreland Investments Ltd [2001] UKHL 6; [2003] 1 AC 311 and Barclays Mercantile itself.
...
[68] Secondly, it might be said that transactions must always be viewed realistically, if the alternative is to view them unrealistically. The point is that the facts must be analysed in the light of the statutory provision being applied. If a fact is of no relevance to the application of the statute, then it can be disregarded for that purpose. If, as in Ramsay, the relevant fact is the overall economic outcome of a series of commercially linked transactions, then that is the fact upon which it is necessary to focus. If, on the other hand, the legislation requires the court to focus on a specific transaction, as in MacNiven and Barclays Mercantile, then other transactions, although related, are unlikely to have any bearing on its application." (UBS AG v. HMRC [2016] UKSC 13)
"[48] The second stage in the analysis is that where, as here, there is a composite transaction comprised of a number of interlinked stages, the court is required to consider whether the composite transaction considered in the round has relevant tax consequences: see para 12 of Rossendale (quoted in para 37 (iii) above). Since the transfer of the gilt strip from the appellant to Investec was effected by means of a unified, composite, transaction, having more than one stage, to apply the statute to only one of those stages would be to take an inadmissibly blinkered view." (Watts v. HMRC [2025] EWCA Civ 1615, Miles, Lewison, Arnold LJJ)
"[85] I also agree. My only surprise was that the appeal was argued on both sides as though Rossendale BC v Hurstwood Properties (A) Ltd [2021] UKSC 16, [2022] AC 690 ("Another aspect of the Ramsay approach is that, where a scheme aimed at avoiding tax involves a series of steps planned in advance, it is both permissible and necessary not just to consider the particular steps individually but to consider the scheme as a whole. Again, this is no more than an application of general principle.") had never been decided." (JTI Acquisition Company (2011) Limited v. HMRC [2024] EWCA Civ 652, Lewison, Newey, Baker LJJJ)
"[28] If Khan had not been decided, the analysis does not seem to me to pose any great difficulty. It is true that, viewed in isolation, the payment by Winn Yorkshire of £200,001 was not a payment to the Appellants; it was a payment to Winn Scarborough, as to £1 for the par value of the A share, and as to £200,000 as a premium on that share. But the whole basis of the Ramsay principle is that it can be an error to view steps in an overall scheme in isolation. This is especially true where the step in question is one of a series of pre-planned steps in a tax avoidance scheme, as explained by Lords Briggs and Leggatt in Rossendale at [12]:
"Another aspect of the Ramsay approach is that, where a scheme aimed at avoiding tax involves a series of steps planned in advance, it is both permissible and necessary not just to consider the particular steps individually but to consider the scheme as a whole. "
[29] If one considers the scheme as a whole, I think there is little doubt that Judge Morgan in the FTT was entirely justified in her conclusion. The payment by Winn Yorkshire to Winn Scarborough was simply the first step in a scheme designed to distribute the majority of the money to the Appellants. The money was being distributed to them because they were the owners of Winn Yorkshire and wished to extract profits from the company into their own pockets. Everything else was just a means of enabling that to happen. That is clear from the factual finding of Judge Morgan, not challenged on this appeal, that "the sole purpose of the relevant parties in implementing the arrangements … was to enable Winn Yorkshire to provide its shareholders with the funds they received as a return on their investment in shares in Winn Yorkshire" (see paragraph 9 above). In those circumstances the conclusion that the money they ended up receiving (£98,465 each[1]) was a distribution by Winn Yorkshire out of its assets to the Appellants as holders of its shares seems to me not only one that was open to Judge Morgan, but obviously right.
[30] Indeed the present case would seem to be a paradigm case for the application of the Ramsay principle. As explained by Lords Briggs and Leggatt in Rossendale at [15], the first stage of the requisite analysis is to "ascertain the class of facts … intended to be affected by the charge" (see paragraph 24 above). That requires a purposive construction of the statute. Subject always to the argument based on Khan, I see no reason to think that Parliament, which used widely expressed language ("any other distribution … in respect of shares in the company") intended by these words to charge only a distribution by a company directly to its shareholders and not a distribution intended to reach, and which in fact reached, its shareholders by a more circuitous route via steps inserted into the overall transaction that "have no business purpose and have as their sole aim the avoidance of tax": see Rossendale at [11]. As Lords Briggs and Leggatt there explain, such steps are often disregarded..." (Clipperton v. HMRC [2024] EWCA Civ 180, Nugee, Lewison, Newey, LJJ)
"[139] ...(8) in the circumstances, we can see no meaningful distinction between the facts in the present case and the facts in Furniss and Carreras. This means that, although it is not necessary to decide the point given the conclusion which we have already reached, we are inclined to agree with Mr Macklam that the reality of the arrangements in this case is that the Appellant paid the £55,316 which was paid to the companies in respect of the issue of the Loan Notes not in order to acquire the Loan Notes himself but instead to procure the issue of the Loan Notes directly to the two Settlements and that the Appellant never acquired the Loan Notes at all so that, on a purposive construction of paragraph 2 of Schedule 13, no loss arose from the transactions for a quite separate reason from the reason given above – i.e. there simply was no acquisition of the Loan Notes by the Appellant at all; and
(9) we note that this was an analysis which appealed to the First-tier Tribunal in Bretten at paragraphs [136] to [148], in relation to similar facts." (Pitt v. HMRC [2022] UKFTT 222 (TC), Judge Beare)
Query the limits (picking and choosing/re-characterising)
" In my opinion this cannot be regarded as a realistic or intellectually possible view of the matter. It does not depend on disregarding for fiscal purposes any one or more of the transactions involved in steps 2 to 5, as having been introduced for fiscal purposes only and as having no independent effect for those purposes, nor on treating the whole series of steps as having no such effect. Each of the steps 2, 3, 4 and 5 had the fiscal effect of giving rise to a charge to income tax on Lady Hastings or on Lady Fitzwilliam for a period of time, and there was a potential charge to capital transfer tax if either had died while in enjoyment of the income. Although the commissioners found as a fact that Lady Hastings accepted the £2m as a genuine unconditional gift from her mother, the Crown's case seeks to make it a conditional gift. Further, although all the transactions were accepted by the commissioners as genuine, the Crown's case seeks to make out that step 4 was not an assignment for a consideration but a gratuitous assignment. No case applying the Ramsay principle has yet held it to be legitimate to alter the character of a particular transaction in a series or to pick bits out of it and reject other bits. In Furniss v Dawson the transfer to the intermediary company Greenjacket was disregarded for fiscal purposes because of the pre-existing informal agreement and of the manner in which the two transactions were carried out, which made it intellectually possible to hold that Greenjacket never had control of the operating companies within the meaning of the statute. No comparable exercise is possible here." (Fitzwilliam v. IRC [1993] STC 502 at 515)
- May depend on whether recognising the separate steps produces a rational result or not
"[37] The need to avoid sweeping generalisations about disregarding transactions undertaken for the purpose of tax avoidance was shown by MacNiven v Westmoreland Investments Ltd [2003] 1 AC 311in which the question was whether a payment of interest by a debtor who had borrowed the money for that purpose from the creditor himself and which had been made solely to reduce liability to tax, was a “payment” of interest within the meaning of the statute which entitled him to a deduction or repayment of tax. The House decided that the purpose of requiring the interest to have been “paid” was to produce symmetry by giving a right of deduction in respect of any payment which gave rise to a liability to tax in the hands of the recipient (or would have given rise to such a liability if the recipient had been a taxable entity.) As the payment was accepted to have had this effect, it answered the statutory description notwithstanding the circular nature of the payment and its tax avoidance purpose." (Barclays Mercantile Business Finance Ltd v. Mawson [2004] UKHL 51)
"[9] Are there any reasons why Parliament should have contemplated a narrower definition of the transaction which has to be considered in deciding whether it is an exchange of shares for debentures? Mr Goldberg QC said that such a reason can be found by examining the origins of paragraphs 4 and 6 of the First Schedule. They are clearly based upon paragraphs 4 and 6 of Schedule 7 to the (UK) Finance Act 1965, which introduced the capital gains tax in the United Kingdom. In fact, all the words which their Lordships have quoted from the Jamaican statute are to be found in the United Kingdom statute, although there are other words in the United Kingdom statute which have not been transposed.
[10] As Anderson J pointed out, the differences mainly arise because the transfer tax is an ad valorem tax on the consideration for the property transferred, whereas the capital gains tax is a tax on capital gains, that is, the difference between the consideration paid on acquisition and the consideration received on disposal. A provision in the Transfer Tax Act which deems a transfer not to have been a disposal exempts it altogether from transfer tax whereas a provision to the same effect in the United Kingdom legislation merely postpones the charge until an actual disposal occurs. Thus paragraph 4(2) in the Jamaican schedule simply says (as quoted above) that the reorganisation "shall not be treated as involving any disposal of the original shares" whereas paragraph 4(2) of the United Kingdom schedule goes on to say "but the original shares (taken as a single asset) and the new holding (taken as a single asset) shall be treated as the same asset acquired as the original shares were acquired". The charge to tax is therefore only postponed: when the new holding is sold, capital gains tax is chargeable on the difference between the acquisition cost of the original holding and the consideration received for the new holding." (Carreras Group Limited v. The Stamp Commissioner [2004] UKPC 16, Lord Hoffmann)
- Circular, self-cancelling steps ignored
"[132] We agree with HMRC that the evidence was clear that a licence fee of this magnitude, put to this purpose, was not a regular feature of property development projects. It conferred a tax advantage on the individual investors by converting the interest cost into capital expenditure on which BPRAs could be claimed in the first year of the scheme.
[133] That feature alone would not prevent the arrangements from achieving their aim. However, the Interest Account mechanism was devoid of any real commercial purpose. Although (as with the Capital Amount) there was a real transfer of funds into an account in OVL's name and a charging of those funds by OVL, the arrangement was entirely circular and in substance self-cancelling. The fact that the LLP could have achieved the same economic result by holding onto the money itself and depositing it with the Co-op as security is relevant in undertaking a realistic appraisal of the facts because it highlights the circularity and self-cancelling nature of the arrangements and the lack of a strong and close nexus with the conversion works. These points serve to underline the lack of any real benefit to OVL from the Interest Amount." (London Luton Hotel BPRA Property Fund LLP v. HMRC [2023] EWCA Civ 362, Whipple, Falk, Lewison LJJJ)
- Payment to trust, loan to employee, loan back to company might suggest nothing had really happened
"[87] This exposes the key point. The provision of a loan, at whatever rate of interest, provides access to the cash lent, but that cannot be considered in isolation from the repayment obligation. The existence of that obligation is critical. What is obtained is the benefit of the funds provided, but subject to an obligation to repay. The fact that the money went back to the Company cannot assist HMRC in demonstrating that the Payment was taxable, any more than the retention of the proceeds of the Loan by Mrs Currell, or indeed by Mr Currell, would have done. If anything, and given that the entire arrangement was "prewired", the fact that the Loan proceeds were returned to the Company might suggest that nothing had really happened." (HMRC v. Currell [2026] EWCA Civ 445, Falk LJ)
- Borrowing from lender to pay interest not disregarded because purpose of legislation was to produce symmetry between liability (for recipient) and deduction (for payer)
"[37] The need to avoid sweeping generalisations about disregarding transactions undertaken for the purpose of tax avoidance was shown by MacNiven v Westmoreland Investments Ltd [2003] 1 AC 311in which the question was whether a payment of interest by a debtor who had borrowed the money for that purpose from the creditor himself and which had been made solely to reduce liability to tax, was a “payment” of interest within the meaning of the statute which entitled him to a deduction or repayment of tax. The House decided that the purpose of requiring the interest to have been “paid” was to produce symmetry by giving a right of deduction in respect of any payment which gave rise to a liability to tax in the hands of the recipient (or would have given rise to such a liability if the recipient had been a taxable entity.) As the payment was accepted to have had this effect, it answered the statutory description notwithstanding the circular nature of the payment and its tax avoidance purpose." (Barclays Mercantile Business Finance Ltd v. Mawson [2004] UKHL 51)
- Capital allowances concerned with who is owner (and suffers depreciation) not with circularity of funds in purchase and leaseback
"[39] The present case, like MacNiven, illustrates the need for a close analysis of what, on a purposive construction, the statute actually requires. The object of granting the allowance is, as we have said, to provide a tax equivalent to the normal accounting deduction from profits for the depreciation of machinery and plant used for the purposes of a trade. Consistently with this purpose, s 24(1) requires that a trader should have incurred capital expenditure on the provision of machinery or plant for the purposes of his trade. When the trade is finance leasing, this means that the capital expenditure should have been incurred to acquire the machinery or plant for the purpose of leasing it in the course of the trade. In such a case, it is the lessor as owner who suffers the depreciation in the value of the plant and is therefore entitled to an allowance against the profits of his trade." (Barclays Mercantile Business Finance Ltd v. Mawson [2004] UKHL 51)
- Look at arrangements as they were intended to operate
"[51] In the pithy words of Ribeiro PJ, the "ultimate question" is "whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically". Where, as in the present case, the issue is whether, construing the TCGA "purposively", linear transactions should "realistically" be seen as constituting a "disposal" within the meaning of the Act, Furniss v Dawson shows that "a pre-ordained series of transactions" or "one single composite transaction" is required. If, as was the case in Craven v White, there is real doubt, for reasons unrelated to a desire to escape the Ramsay approach, as to whether a tax-saving scheme will be put into effect, it is easy to understand why the requisite "pre-ordained series of transactions" or "single composite transaction" should not be considered to exist. In such circumstances, inability to identify an ultimate purchaser and price is symptomatic of uncertainty as to whether the sale will happen at all.
[52] It by no means follows that the Ramsay approach should be incapable of applying wherever the ultimate purchaser and price cannot be identified. Lord Jauncey, moreover, noted in Craven v White that there could be circumstances in which a transaction was considered interdependent without a final price or a specific buyer having been identified. He cited sale by auction, but it seems to me that it must also be possible for the Ramsay approach to apply to schemes under which assets are sold in the market. If, for instance, the plan were for an asset to be re-sold in the market immediately and arrangements for that had been made by the time of the first transaction in the series, I do not think it could matter that the buyer and price could not yet be determined. The transactions could nonetheless be "realistically" seen as constituting a "disposal" within the meaning of the TCGA. If Vinelott J thought otherwise in News International plc v Shepherd, then I respectfully disagree with him on this point." (Trustees of Morrison 2002 Maintenance Trust v. HMRC [2019] EWCA Civ 93, Newey LJ)
- Risk of trustees not exercising their discretion to make loans as planned disregarded
"[65] There was a chance that the trust company as trustee of the Principal Trust might not agree to set up a sub-trust and there was a chance that as trustee of a sub-trust it might not give a loan of the funds of the sub-trust to the footballer. But that chance does not alter the nature of the payments to the trustee of the Principal Trust. In applying a purposive interpretation of a taxing provision in the context of a tax avoidance scheme it is legitimate to look to the composite effect of the scheme as it was intended to operate. In Inland Revenue Comrs v Scottish Provident Institution [2004] 1 WLR 3172 Lord Nicholls stated (para 23):
“The composite effect of such a scheme should be considered as it was intended to operate and without regard to the possibility that, contrary to the intention and expectations of the parties, it might not work as planned.”
The footballers, when accepting the offer of higher net remuneration through the trust scheme which the side letters envisaged, were prepared to take the risk that the scheme might not operate as planned. The fact that the risk existed does not alter the nature of the payment to the trustee of the Principal Trust." (RFC 2012 v. Advocate General for Scotland [2017] UKSC 45)
- Focussing on snapshot in time normally anti-thesis of Ramsay approach
"[88] ... It seems to me, therefore, that the UT's concentration on Melluish had the unfortunate effect of diverting their attention from the simple untechnical language of section 61(1)(a) itself, and from the cardinal principle, where a Ramsay analysis is in issue, of regarding a composite scheme as a whole. Indeed, confining attention to a "snapshot in time" is normally the very antithesis of what the Ramsay approach requires, as Lord Wilberforce so clearly explained in the passages I have cited at [83] and [84] above.
[89]... The second feature was that section 61(1)(a) "does not invite any analysis of why a person ceases to own an asset", but I can see no reason in principle why an investigation of the taxpayer's motives should not be relevant to the question whether he has, in any real and practical sense, ceased to own an asset for the purposes of the statutory code. The third feature was that section 61(1)(a) "does not invite any analysis of whether it is possible, likely or pre-ordained that a person will become an owner of the asset again in the future", to which I would answer that a realistic consideration of that issue may be very relevant to the question whether there has been a cessation of ownership in the sense contemplated by the statute." (HMRC v. Altrad Services Limited [2024] EWCA Civ 720, Henderson, Nugee, Whipple LJJ)
- No cessation of ownership where assets sold to bank as part of tax scheme to reacquire 3 weeks later and enjoy in the meantime
"[85] Adopting this holistic approach, and on the basis of the unchallenged facts found by the FTT, I have little hesitation in concluding that the taxpayers did not cease to own the relevant assets within the meaning of section 61(1)(a) when they were sold to the Bank. On the contrary, the whole purpose of the scheme was that the same assets would be returned to the sole beneficial ownership of the taxpayers upon exercise of the put option by the Bank three weeks later, and that for all practical purposes the taxpayers would continue to have the uninterrupted beneficial use of the assets for the purposes of their trade in the meantime. On the FTT's findings, the scheme was entirely tax-motivated and none of the steps in it had any real commercial purpose. Nor was there any real likelihood that any of the steps would not take place in accordance with the plan. In the language of the earlier Ramsay cases, the steps in the scheme were "pre-ordained", although it has been clear since the decision of the House of Lords in Scottish Provident that it may anyway be sufficient to support an application of the Ramsay principle that the scheme in question was in fact implemented as planned, even if there was a real, but remote, possibility that one or more of the steps or contingencies in it might not happen.
...
[90] ... The transactions were not sham, and they had the legal effects which they purported to have. But one of the key lessons of Rossendale is that a Ramsay analysis is not necessarily precluded even if a composite transaction does have its purported legal effect when the steps are viewed in isolation. The leases granted to the SPV companies by the taxpayer defendants in that case were not sham, and as a matter of land law they did indeed confer possession of the demised premises on the SPV tenants. But, according to the Supreme Court, the concept of "possession" in the relevant statute, when purposively construed in the unusual context of the rating avoidance scheme, had a broader meaning than the mere legal right to possession conferred by a valid lease, and the SPVs did not obtain possession of the properties in that broader sense.
[91] By parity of reasoning, it may be said that, in the present case, the taxpayers did cease for a short period to be the legal and beneficial owners of the assets which they sold to the Bank at the start of the scheme, but that this does not preclude an analysis which looks at the scheme as a whole and concludes that the taxpayers did not, in any real or practical sense, cease to own the assets within the meaning of section 61(1)(a) during the three weeks while the scheme ran its course. There is nothing about the concept of cessation of ownership which positively requires the normal and narrower meaning of the concept to prevail from the moment when the initial sale was completed, even though the sale formed an integral part of a composite transaction designed to return the assets to the full legal and beneficial ownership of the taxpayers three weeks later." (HMRC v. Altrad Services Limited [2024] EWCA Civ 720, Henderson, Nugee, Whipple LJJ)
- Existence of 'payment' depends on practical, business reality, including any composite transaction
"[82]...The question whether a "payment" is made for these purposes should be answered by looking at the practical, business reality of the transaction, including any composite transaction of which the payment forms part. If the intended purpose and effect of the transactions is that money leaves the scheme and is placed at the free disposal of the member, the mere fact that the money may be subject to an equitable obligation to restore it to the scheme will not prevent it from being a "payment" in the ordinary sense of that word. To conclude otherwise would deprive the charge to tax of effect in many of the most egregious cases where it is most needed." (Clark v. HMRC [2020] EWCA Civ 204, Henders, Bean, Nicola Davies LJJJ)
- Distribution by a company designed to reach shareholders as a result of a series of steps is in respect of their shares
"[31] It follows that the answer to the first stage of the enquiry is that "distribution … in respect of shares" is, on a purposive construction of the statute, wide enough to include a distribution by a company which is designed to reach, and does reach, the company's shareholders even if it does so as a result of a series of steps. That is the "class of facts intended to be affected by the charge". The second stage of the enquiry is to discover whether the relevant facts fall within that class, in the sense that they "answer to the statutory description". That is straightforward enough. The distribution by Winn Yorkshire, was, as to some 98.5% of the sum distributed, designed to reach, and did reach, the Appellants (its shareholders). It therefore answers the statutory description." (Clipperton v. HMRC [2024] EWCA Civ 180, Nugee, Lewison, Newey, LJJJ)
- Disregard of intermediate distribution where it is an intermediate step in scheme
"[63] In those circumstances I do not think we need to decide whether the Winn Scarborough dividend was itself a transaction within s. 383 ITTOIA. [The taxpayer] said that there cannot have been two distributions of the same money as that cannot have been what Parliament intended, and this approach might give rise to absurd results.
[64] [HMRC] said that there were two possible answers. The first is that there was indeed only one distribution, namely the Winn Yorkshire distribution. This was because in a case where the Ramsay approach leads to a composite transaction being taxed as one overall transaction, the individual elements in the overall transaction are just mechanics and are subsumed into the overall transaction. They have no separate existence for fiscal purposes. I think this argument is well founded: see UBS per Lord Reed at [64], where he refers to schemes that "involve intermediate transactions inserted for the sole purpose of tax avoidance" and says that it is quite likely that a purposive interpretation "will result in such steps being disregarded for fiscal purposes". If this is right, the Winn Scarborough dividend has no separate existence for tax purposes; it is not to be viewed in isolation but simply as part of the means by which the Winn Yorkshire distribution reached its intended recipients." (Clipperton v. HMRC [2024] EWCA Civ 180, Nugee, Lewison, Newey, LJJJ)
- Sale of right to dividend to turn income into capital receipt disregarded
"...the sale and assignment for value to Mallardchoice of the future right to the 1979 dividend was a discrete transaction directed to that dividend alone which was carried through by artificial and pre-ordained steps inserted for no business purpose. As such, the liability for tax on the indirect receipt of such dividend by Shurltrust has to be determined by stripping out the artificial steps and applying the provisions of the Taxes Acts to the real transaction, i e the payment of a dividend to the shareholder, Shurltrust, which received such dividend as income.
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irst, in my judgment Mr Nugee's basic premise is not correct. Section 470 only applies where 'the owner of any securities ... sells or transfers the right to receive any interest'. As I have already said, the Ramsay principle applies to the present case. In consequence, the artificial step inserted (i e the assignment by Shurltrust to Mallardchoice for value) falls to be disregarded in construing the relevant taxing provisions. Therefore, applying the Ramsay principle, the basic requirement to bring s 470 into operation (i e the sale of the right to the dividend to Mallardchoice) has to be disregarded. Accordingly, s 470 does not apply to this case and the income is not to be deemed to be the income of Mrs McGuckian." (IRC v. McGuckian [1997] STC 908 (HoL) at 913)
- But distribution of LLP profits to corporate member to be invested and recontributed to fund payments to individual members not profit share of individual members
"[74] In my judgment, there is no way in which those commercial benefits could have been delivered without the involvement of the corporate partner, or the mechanism of special capital, and I can see no answer to Mr Peacock's simple submission for the partnerships that the steps in the scheme involving special capital cannot denature, or alter the correct characterisation of, the allocation of profits, because those steps essentially concerned the use to which the corporate partner put its own post-tax income from the partnership. To treat the profits allocated to the corporate partner as, in some metaphorical version of reality, the disguised profits of the participating individual partners, would in my view be to rewrite the agreement between the parties and to replace it with something quite different. A reconstruction of this nature would also ignore the commercial substance of the conditions which had to be satisfied to qualify for a final award of special capital, and the unchallenged evidence that a significant proportion in number and value of provisional awards of special capital never became final.
[75] I fully accept that the PIP scheme must be critically examined as a whole, and that the statutory concept of a "right" to share in the profits of the partnership's trade in section 850(2) of ITTOIA 2005 is not in principle immune from a Ramsay approach which might, in an appropriate context, give it a broader meaning than an enforceable legal entitlement, which is what I take to be the normal connotation of a "right". But any wider approach of that nature could only be justified if, as in Rossendale, the statutory purpose of the relevant provision can be safely identified, and the wider meaning, when realistically applied to the facts, is needed to prevent the frustration of Parliament's intention in enacting it. That is where, in my view, HMRC's supposedly purposive approach to the construction of section 850 breaks down. The purpose of section 850 is to determine the shares of the partners in the actual profits of the partnership trade for the relevant accounting period, and this can only be done by examining the rights of the partners, including the corporate partner, to share in them. There is nothing illusory, or unreal, about the share allocated to the corporate partner, and it cannot therefore be simultaneously treated as consisting of separate slices of profit allocated to the participating PIP partners in addition to their direct shares." (HMRC v. Bluecrest Capital Management LP [2023] EWCA Civ 1481, Henderson, Lewison, Falk LJJ)
No basis to disregard corporate member's share
"[76] The unreality of HMRC's approach is illustrated, to my mind, by their acceptance that, if it is adopted, the corporate partner cannot be charged to corporation tax on its allocated profit share. This concession may be tactically prudent, but I cannot discern any principled basis for it. The corporate partner was undoubtedly allocated its share, and the PIP arrangements were predicated on the fact that the corporate partner would then be liable to corporation tax in respect of it, at a lower rate than the top rate of income tax payable by the individual partners. Rates of income tax and corporation tax are, of course, set by Parliament, and if the former are significantly higher than the latter, that must be taken to reflect Parliament's intention. It follows that, if a partnership arranges its affairs so that a substantial proportion of its profits is payable to a corporate partner, and the arrangement is genuine and has a real commercial purpose, HMRC cannot complain and their remedy, if the arrangements are considered objectionable, is to procure a change in the law as happened in 2014." (HMRC v. Bluecrest Capital Management LP [2023] EWCA Civ 1481, Henderson, Lewison, Falk LJJ)
- Share purchase and loan to fund purchase price not viewed as single contract
"[27] [The company] submitted that the EPS Agreements were entered into at the same time and should be seen as a single agreement. That was the view of the FTT which held, at [46] of the Decision, that where both agreements were entered into at the same time, the two agreements must be seen as a single contract. We do not agree. In our view, the Share Acquisition Agreement and the Facility Agreement should be regarded as two separate agreements. There is nothing in the EPS Agreements to suggest that the parties intended that they should be regarded as a single contract or that the Facility Agreement should be seen as simply amending the Share Acquisition Agreement." (Aspect Capital Limited v. HMRC [2014] UKUT 81 (TCC), Warren J and Judge Sinfield)
- Look at overall effect of loan (repayment obligation is critical)
"[87] This exposes the key point. The provision of a loan, at whatever rate of interest, provides access to the cash lent, but that cannot be considered in isolation from the repayment obligation. The existence of that obligation is critical. What is obtained is the benefit of the funds provided, but subject to an obligation to repay. The fact that the money went back to the Company cannot assist HMRC in demonstrating that the Payment was taxable, any more than the retention of the proceeds of the Loan by Mrs Currell, or indeed by Mr Currell, would have done. If anything, and given that the entire arrangement was "prewired", the fact that the Loan proceeds were returned to the Company might suggest that nothing had really happened." (HMRC v. Currell [2026] EWCA Civ 445, Falk LJ)
- Successive short term trusts as mechanism to make outright gift treated as single, composite transaction
"The findings of the Special Commissioners were to the effect (a) that the two settlements were planned as a single tax-saving package, (b) that they had no purpose other than tax mitigation, (c) that at the time when the first settlement was executed there was no practical likelihood that the second settlement would not be made by Mrs Hatton, provided always that Mrs Cole was then still living, and (d) that the transactions did in fact take place as planned.
The question is whether on these findings the four essential elements identified by Lord Oliver in Craven v White are present so as to justify the court in treating the two settlements as a single composite transaction within the Ramsay principle.
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On the basis that the two settlements were made in circumstances which satisfied each of the four essential elements in Lord Oliver's formulation in Craven v White, the court must apply the provisions of the relevant taxing statute—in this case s 20(2) of and para 4(2) of Sch 5 to the 1975 Act—to the single composite whole formed by the series of preordained transactions (see [1988] STC 476 at 507, [1989] AC 398 at 514).
In the present case, when viewed as a single transaction having a single legal result, the composite transaction is a settlement by Mrs Cole under which she was entitled to a beneficial interest in possession of the settled property until midnight on 12/13 August 1978. At midnight on 12/13 August her interest in possession came to an end. She was then living; and accordingly tax is to be charged as if at that time she made a transfer of value, and the value transferred had been equal to the value of the property in which her interest subsisted—that is to say the property which she had settled on 10 August.
If the composite transaction is viewed as a single transaction, para 4(5) of Sch 5 can have no application. It follows that I answer the second of the questions raised by the case stated in the negative. In my judgment tax is to be charged under para 4(2) of Sch 5 as if Mrs Cole had made a chargeable transfer at midnight on 12/13 August 1978." (Hatton v. IRC [1992] STC 140, Chadwick J)
- Gift of shares to trust followed by company purchasing own shares not treated as a gift of cash
"[25] We do not consider that there is any inserted step which could be cut out in such a way so as to transform the gift of shares into a gift of cash. The starting point was that the brothers owned shares. The end result was that the settlement had cash. An inserted step cannot, by definition, be either the starting point or the end result. One cannot cut out the transfer of the shares to the trust and still have the cash in the trust; one cannot cut out the purchase of own shares and still have cash. Even if, as Mr Twiddy suggested, one considers the making of the settlement as a separate transaction, which we do not think one can, because that would mean that there was initially no settled property, we do not see any way in which a gift of shares can become a gift of cash, because the ownership of shares is part of the starting point. Mr Twiddy was really arguing that because (on the hypothesis, which we have found not to be the case, that there is a single composite transaction) the brothers knew that the shares were about to become cash, in some way the brothers had inserted the shares into a transaction which would have been made with cash. As Lord Keith of Kinkel said in Countess Fitzwilliam v IRC [1993] STC 502 at 515, [1993] 1 WLR 1189 at 1203: 'No case applying the Ramsay principle has yet held it to be legitimate to alter the character of a particular transaction in a series or to pick bits out of it and reject other bits.' We can see no way in which an inserted step can be cut out in order to turn shares into cash." (Reynaud v. IRC [1999] STC (SCD) 185, Judge Avery Jones)
Some provisions focussed only on specific transaction
[77] In Khan, both the statutory and factual context was quite different. Andrews LJ, with whom Dingemans and Peter Jackson LJJ agreed, reached the view that the statutory language was concerned with the transaction under which the distribution arose rather than with connected transactions looked at as a whole, and that the legislation applied to the person receiving the distribution or, if different, the person to whom it "belongs" (see at [52] and [57]). There was only one answer to the belonging question: Mr Khan ([83]). However, even if it was necessary to look beyond that and determine whether Mr Khan benefited from the distribution, applying Bupa, Sainsbury and Wood Preservation or Ramsay principles, then he had done so. If the transactions could be viewed as a composite whole then they could not be analysed as involving a distribution to the vendor shareholders (who had sold their shares before the distribution was made) rather than to Mr Khan, and Mr Khan derived a real benefit (see at [76] to [81], citing Piggott v Staines, a case referred to at [?47] above).
...
[80]...The concept of "receiving or entitled to" income is a broad one that extends beyond beneficial entitlement, and in any event Mr Khan and Mr Good obtained real benefits from the payments to them, in a way that Houmet was not found to have done. In Khan the taxpayer became the owner of the company, as intended, and benefited from the distribution because it enabled him to satisfy a liability that he had undoubtedly taken on. Further, the transaction could not readily be recharacterized as involving a distribution to the sellers who had already transferred their shares. In Good, the taxpayer benefited through the reduction of his liability under the loan." (Hargreaves Property Holdings Limited v. HMRC [2024] EWCA Civ 365, Falk, Jackson, Nugee LJJ)
"[52] In Khan, it was held that on a purposive reading of identical words in a different provision of legislation, focus had to be on the particular transaction under which the distribution arose, and not on the connected transactions considered as a composite whole [52]. The same applies here, and the focus must be on the transaction giving rise to the income in question. I do not understand that approach to be disputed in principle although there is a dispute about the way it is applied and with what result." (Good v. HMRC [2023] EWCA Civ 114)
"[73] On the face of it, therefore, s.385(1) is not a statutory provision that is concerned with the overall economic outcome of a series of commercially interlinked transactions, but only with the question of who was entitled to the distribution or who actually received it. In this case, the distribution was the money that was payable by the Company in respect of the 98 shares under the buyback agreement, the OMPA. The agreements in this case did not resemble the cross-cancelling option arrangements entered into in the Scottish Provident case. Mr Khan did not have a "bare legal entitlement" to the distribution. He had a contractual entitlement to the price for the shares he had sold to the Company under an agreement that was last in time to be executed. That price was to be paid by means of a taxable distribution. He had not created a charge or trust over the price in favour of someone else, or assigned it to someone else. No-one had a better right to that money than he did." (Khan v. HMRC [2021] EWCA Civ 624, Andrews LJ - taxpayer seeking to rely on Ramsay approach, unsuccessful)
"[35] We do not think that there was any disagreement between the parties as to the principle that certain statutory provisions may require a series of steps to be looked at as a composite whole whereas others are only interested in specific transactions. The dispute here is how that applies in relation to s385 ITTOIA.
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[71] We, accordingly, reject Mr Sykes’ submission that, for the purposes of s385 properly construed, it is necessary to have regard to the whole of any interlinked transactions viewed as a composite. Having concluded, for the reasons above, that the purpose of s385 ITTOIA is the identification of the person from whom HMRC can seek to recover the tax, all that we need to do is determine whether, on the facts, Mr Khan was either the actual recipient of the distribution or, if not, he was entitled to the 15 distribution." (Khan v. HMRC [2020] UKUT 168 (TCC), Judge Raghavan and Judge Andrew Scott)
- Distinction between what is the distribution and who is entitled to/received it
"[49] The question in the present case arises at an earlier stage of the analysis, which is what the relevant distribution was, and whether it was a distribution in respect of shares, and hence a taxable distribution, at all. For reasons that I have given earlier I think that does require a purposive construction of the statute in accordance with the Ramsay principle, and I do not think that what Andrews LJ quite rightly says in the context of identifying the recipient or person entitled for the purposes of s. 385(1)(b) can be transposed to the prior question as to what sort of distributions were intended by Parliament to be taxable. That was not a question before her either expressly or implicitly. It was not for example argued that the distribution in Khan was really the prior payment of £1.95m to the vendors for their shares. I do not propose to consider whether such an argument could have been made – there would appear to be certain difficulties with it – but if it had been, the Court would have had to grapple with the question of what the distribution in question was, and whether it was the earlier payment of £1.95m in respect of the vendors' 99 shares, or the later payment of £1.95m in respect of Mr Khan's 98 shares. But those were not the issues before the Court, and I do not think Andrews LJ meant to say, or did say, anything about how to identify the distribution." (Clipperton v. HMRC [2024] EWCA Civ 180, Nugee, Lewison, Newey, LJJJ)