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UBS and DB: a further victory for purposive legal interpretation

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In UBS AG v HMRC and DB Group Services v HMRC, the Supreme Court applied a purposive Ramsay approach when considering the treatment of composite transactions which were designed to avoid the payment of income tax and NICs on bankers’ bonuses. The the court did not accept HMRC’s wider view that the employees had effectively received cash; however, it did accept the ‘narrower Ramsay argument’ and ruled that the individuals were treated as receiving unrestricted securities. This decision means that many of the most popular means of avoiding tax in this field can no longer be guaranteed to be effective.

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