Following on here I am advised that the House of Lords agrees with Ritchie so there.
@worstall Shame you ignore the fact that the House of Lords agree with me. But why let facts get in the way of diatribe?
This is what Ritchie says the House of Lords said:
Tax avoidance …. is a course of action designed to conflict with or defeat the evident intention of Parliament.
This is what the House of Lords actually said:
In order to understand the line thus drawn, submitted Mr. Henderson, it was essential to understand what was meant by \”tax avoidance\” for the purposes of section 741. Tax avoidance was to be distinguished from tax mitigation. The hall mark of tax avoidance is that the taxpayer reduces his liability to tax without incurring the economic consequences that Parliament intended to be suffered by any taxpayer qualifying for such reduction in his tax liability. The hall mark of tax mitigation, on the other hand, is that the taxpayer takes advantage of a fiscally attractive option afforded to him by the tax legislation, and genuinely suffers the economic consequences that Parliament intended to be suffered by those taking advantage of the option. Where the tax payer\’s chosen course is seen upon examination to involve tax avoidance (as opposed to tax mitigation), it follows that tax avoidance must be at least one of the taxpayer\’s purposes in adopting that course, whether or not the taxpayer has formed the subjective motive of avoiding tax.
My Lords, I am content for my part to adopt these propositions as a generally helpful approach to the elusive concept of \”tax avoidance\”, the more so since they owe much to the speeches of Lord Templeman and Lord Goff of Chieveley in Ensign Tankers Leasing Ltd. v. Stokes  1 A.C. 655 at 675C-676F and 681B-E. One of the traditional functions of the tax system is to promote socially desirable objectives by providing a favourable tax regime for those who pursue them. Individuals who make provision for their retirement or for greater financial security are a familiar example of those who have received such fiscal encouragement in various forms over the years. This, no doubt, is why the holders of qualifying policies, even those issued by non-resident companies, were granted exemption from tax on the benefits received. In a broad colloquial sense tax avoidance might be said to have been one of the main purposes of those who took out such policies, because plainly freedom from tax was one of the main attractions. But it would be absurd in the context of section 741 to describe as tax avoidance the acceptance of an offer of freedom from tax which Parliament has deliberately made. Tax avoidance within the meaning of section 741 is a course of action designed to conflict with or defeat the evident intention of Parliament. In saying this I am attempting to summarise, I hope accurately, the essence of Mr. Henderson\’s submissions, which I accept.
It\’s worth noting that this was in the course of telling the IR (as then was) ever so politely to piss off and stop accusing a retired professor of tax avoidance.
This I think is the important part:
The hall mark of tax avoidance is that the taxpayer reduces his liability to tax without incurring the economic consequences that Parliament intended to be suffered by any taxpayer qualifying for such reduction in his tax liability. The hall mark of tax mitigation, on the other hand, is that the taxpayer takes advantage of a fiscally attractive option afforded to him by the tax legislation, and genuinely suffers the economic consequences that Parliament intended to be suffered by those taking advantage of the option.
To take an example, the Greens. Parliament has expressly stated that the transfer of assets between spouses is not a taxable event, Parliament has also expressly stated that dividends from UK companies payable to foreigners non-resident nor domiciled in the UK are not subject to UK income tax.
Given that Lady Green really does own Taveta, which owns Arcadia, and that Lady Green is not resident or domiciled in the UK, her dividends are not taxable in the UK.
Allow us, just for a moment, to accept the Ritchie/UKUncut claim, that Sir Philip transferred these shares in order to avoid such dividend taxation.
But he has absolutely taken the economic consequence: he no longer owns those shares. They are not his property. He cannot vote them. If his wife decides to throw him out of the house she can and keep the property (until a very interesting divorce case at least). She can fire him from his job.
This isn\’t tax avoidance, this is tax mitigation, for he meets that test that Ritchie has pointed us to.
We can then trot through almost all of the cases that Ritchie regards as tax avoidance and show them to be the entirely legal tax mitigation. Using a personal services company? This isn\’t tax avoidance because one does indeed take the economic consequence of running a company. The costs of doing so.
Boots going to Switzerland? This isn\’t tax avoidance it is tax mitigation: they really have gone to Switzerland. Loading up on debt? Economic consequence is that you\’ve got to service that debt in an uncertain environment. Mitigation, not avoidance.
By pointing us to the law and going \”There! See!\” Murphy is actually revealing that his entire construct is nonsense.
Perhaps he\’d better stick to making things up rather than trying to deal with reality, eh?