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Abstract: 

As we are constantly being reminded, we live in a global economy and money knows no borders. But investors who wish to take advantage of cross-border investment opportunities must also stay on top of tax law outside of their home jurisdictions. The IRS is not the only taxing authority keeping watch over investors’ techniques and tactics. In the U.K., the Court of Appeal and the Supreme Court have recently released decisions on two marketed tax avoidance schemes. Result: one win for the taxpayer (in Mayes ); one win for Her Majesty’s Revenue and Customs (in Tower MCashback ). Viewed together, the two cases help delineate the scope of the so-called “ Ramsay principle,” the substance-over-form doctrine developed by the U.K. courts in tax cases. Understanding that doctrine is important for individuals and businesses contemplating investments in the U.K.—and for their advisors.

Keywords: tax-avoidance schemes; recharacterization; substance over form; Ramsay principle; Mayes; Tower MCashback 

Affiliations:  1: Sullivan & Cromwell LLP.