Furniss v Dawson, adieu

IN EDI SERVICES and Others(No 2)[2006] STC (SCD) 392 the Special Commissioners Stephen Oliver and Howard Nowlan reviewed the current state of the Ramsay doctrine comparing the pre- and post-Westmoreland/BMBF approaches. They found for HMRC on both bases but made it clear that the purposive approach is preferred to the old-style method of 'disregarding' intermediate steps inserted solely to avoid tax and with no commercial purpose. See 'Golden NI' (Update Taxation 6 July 2006 page 373) for a short report of the decision.

Background

EDI was one of many companies that paid directors' bonuses in the form of gold coins and was taken as a test case on the point; the Special Commissioners' powers to designate a lead case was the subject of EDI Services (No 1). Bonuses had been paid in gold coins in 1994 and 1995 and the...