A general anti-avoidance rule is an essential part of any effective tax system. That is because all tax regulation is written and it is an inevitable fact of life that words have uncertain meanings, however much we like to deny it and however hard Parliament works to try to define them in taxes acts.
That means all tax law is open to abuse if the only basis on which it can be interpreted is the strict meaning of words, which cannot be known until a judge has ruled on the issue. So, we need a better basis for interpretation and that is to look at the purpose of the law, and the intention of the taxpayer and then decide if the two coincide. If they do, then everything is fine. If they don\’t then quite clearly action needs to be taken.
And who is to do the looking and the deciding? That\’ll be a judge again, won\’t it? Well, in a country operating under the rule of law it will be anyway.