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The Ramsay principle, Tower MCashback and purposive construction of statute

'Substance over form' has been a long standing principle of accounting treatment under UK GAAP. Tax legislation however, often looks to the legal form of a transaction rather then looking at the substance behind it or behind a series of transactions to determine the overall result. The extent to which a court is entitled to disregard the legal form of the transaction and to have regard to the underlying substance has evolved over time. The problem is well put in the following extract from a judgment of Lord Greene:

'In dealing with income tax questions it frequently happens that there are two methods at least of achieving a particular financial result. If one of those methods is adopted tax will be payable. If the other method is adopted, tax will not be payable... The net result from the financial point of view is precisely the same in each case, but one method of achieving it attracts tax and the other method does not. There have been cases in the