“ The best approach from a judge is to base factual findings on inferences drawn from documentary evidence and known or probable facts. “This does not mean that oral testimony serves no useful purpose... But its value lies largely... in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth…”
“(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action. (2) If a court is willing to draw such inferences they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness. (3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue. (4) If the reason for the witness's absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified .”
“[36] In my view the citations from the speeches of Lords Wilberforce and Fraser I have set out at [31] to [35] above are wholly inconsistent with the argument of counsel for Mr Schofield. The First-tier Tribunal concluded as matters of fact that the four options in this case were parts of an overall pre-ordained scheme designed to produce neither a gain nor a loss. In those circumstances it is wrong to adopt the step by step approach for which counsel for Mr Schofield contended and consider only Option 1… [39] Where the Ramsay principle does apply the conclusion may be expressed in a number of different ways; for the purposes of ss 1 and 2, TCGA no asset, no disposal, no loss or all three. Counsel for HMRC contended that the relevant transaction was the four options together and such a transaction does not constitute a disposal to which ss 1 and 2, TCGA apply. This accords with the conclusion of Lord Fraser in Ramsay itself (see[1981] STC 174 at 182,[1982] AC 300 at 339), and I am content to accept it .”
“ Like my noble and learned friend, Lord Templeman, I approach this case on the basis that there is a fundamental difference between tax mitigation and unacceptable tax avoidance. Examples of the former have been given in the speech of my noble and learned friend. These are cases in which the taxpayer takes advantage of the law to plan his affairs so as to minimise the incidence of tax. Unacceptable tax avoidance typically involves the creation of complex artificial structures by which, as though by the wave of a magic wand, the taxpayer conjures out of the air a loss, or a gain, or expenditure, or whatever it may be, which otherwise would never have existed. These structures are designed to achieve an adventitious tax benefit for the taxpayer, and in truth are no more than raids on the public funds at the expense of the general body of taxpayers, and as such are unacceptable. Again, examples have been given in the speech of my noble and learned friend .”
“ Ramsay and its sister case Eilbeck v Rawling , which were heard at the same time, both concerned circular self-cancelling paper transactions which were designed to return the taxpayer to the position from which he started. If the series of transactions were regarded as a whole, the taxpayer made neither gain nor loss beyond the fees he paid for the scheme. If each transaction in the series was considered separately, however, they were said (incorrectly as it happened, for both schemes failed on technical grounds) to produce an allowable loss and an exempt gain. The loss was not independent of the gain; it was entirely dependent on, and merely reflection of, the gain. It was quite impossible to have the one without the other .”
“ Whatever else the word ‘loss’ in the capital gains tax legislation might mean, therefore, it did not include a ‘loss’ which the taxpayer sustained only in the course of a preconceived series of transactions deliberately designed to produce neither loss nor gain. But why not? It was not, in my opinion, because the word ‘loss’ is an ordinary English word understood by businessmen and accountants rather than a technical legal term: there is no hint in Lord Wilberforce’s speech of any such distinction. Nor was it because of some perceived distinction between ‘the real world’ and the ‘world of make-belief’. These are forensic expressions which yield no criterion for distinguishing between them. The key lies in Lord Wilberforce’s approval of the United States decisions and his indication that they encapsulated a process of thought which it would not be inappropriate for the courts of the United Kingdom to adopt. It was because it is the likely (though not inevitable) result of a purposive construction of fiscal legislation that it should normally be confined to transactions which have some purpose beyond the mere generation of tax relief. The no business purpose test provides a practical criterion for distinguishing between transactions which operate ‘in the real world’ and transactions which operate in ‘the world of make-belief’ and an appropriate criterion for distinguishing between losses of a kind which were within the contemplation of the legislature when granting relief from tax and losses which were not. It also provides a defensible rationale for leaving intermediate steps out of account, not because they did not take place, but because they fell outside the legislative intent .”
“ A process under which a party has to yield in respect of one part of a composite transaction in order to obtain the much desired benefits of another part of the same transaction is of the essence of a genuine commercial bargain. ”