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2 |
facts thus disclosed a preordained series of transactions
carried out in order to secure a payment of interest and a tax advantage
in that WIL now had an allowable loss. In the Court of Appeal Peter Gibson
LJ placed the transaction on the tax mitigation side of the line as distinct
from tax avoidance9
not least because what upset the Revenue here was not the fact of the
payment of interest but rather the fact that the payment was made to a
tax exempt body. This reason, although not its formulation, also appealed
to |
Lord Hoffmann, giving the major speech in which all members of the house concurred held (1) that, construing the relevant legislation its context, the question to be decided was whether there had been a payment; (2) that, in the present context, one had to distinguish terms which should be construed juristically from those which should be interpreted commercially; (3) that the term payment was to be construed juristically as opposed to commercially and (4) in this case, the juristic meaning was that there was a payment if the legal obligation to pay interest had been discharged. It followed that there was no room for the Revenue’s broadly formulated principle; moreover, any such principle would be beyond the court’s powers since those powers were limited to construing the statutory words in their particular statutory context. This is surely right but begs lots of questions about the processes of interpretation and application. The House was concerned to establish the legitimacy of the Ramsay approach, but this lay in its being one of statutory interpretation and application. This meant that Lord Hoffmann was simply explaining what judges had actually been doing for the last 20 years, whether or not those judges actually knew it. M Jourdan’s surprise at discovering he had been speaking prose springs easily to mind. One word of caution is however necessary. A survey of recent decisions of the House of Lords will show again and again that the House insists on examining words in their context as the basis for statutory interpretation; tax lawyers are not being singled out for special treatment.10 |
So far this decision has mostly been greeted with stunned silence. Here are some points to bear in mind. |
The leading speech, by Lord Hoffmann (paragraphs 19–75), was expressly endorsed by all members of the House. |
The narrow question decided by the House was to reject a particularly virulent form of the Ramsay fiscal nullity doctrine advanced for the Revenue (that doctrine was formulated in paragraph 28). Those who, like the writer, have been arguing that the composite transaction doctrine stemming from Ramsay is simply one way of categorising the facts to which the law has to be applied by the Revenue will be disappointed that so much may have been lost by the Revenue’s argument in this case. However one must place considerable emphasis on the word ‘may’; we simply do not know what will come next. |
Of the other substantive speeches, it is that by Lord Nicholls which should receive at least as much attention as the speech of Lord Hoffmann. He preferred the term ‘Ramsay approach’ to a ‘Ramsay doctrine’ (paragraphs 7 and 8). The Ramsay approach refers to preordained composite |