The Ramsay Principle tax planning update

Article Abstract:

The Ramsay Principle, as embodied in a decision by the UK House of Lords, holds that taxpayers are not allowed to benefit from capital losses arising from one step in a series of interconnected, self-cancelling steps that are not contracted. The Ramsay Principle is based on the reasoning that after the series of transactions, the allowable loss was matched by a non-taxable gain and there is no loss in reality. In a subsequent case in 1989, The House of Lords held that for the Ramsay Principle to be applied it must meet a series of delineated steps. The real transaction to be taxed must be identified, and a court can arrive at the reality of what Parliament meant to tax by stripping away transactions with no commercial value from the series.

Cases, Tax accounting, Tax administration and procedure, Tax administration, United Kingdom. Parliament. House of Lords

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VAT on construction and property: the new regime

Article Abstract:

The new value added tax (VAT) rules in the 1989 Finance Act will affect construction, land, and property taxation rates. Most of the changes are scheduled to take effect on April 1, 1989. The major changes include: assessing a VAT on most civil engineering, demolition, and construction services; assessing a 15% VAT on new buildings completed after April 1, 1989; assessing a 15% VAT on the value of land beginning August 1, 1989; and allowing landlords the option of charging a 15% VAT on rents and sales in order to recover input tax incurred on the building. Implications of the changes are also discussed.

Accounting and auditing, Value-added tax, Great Britain

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