Lord Hoffmann, Tax Law and Principles

PS Davies and J Pila (eds), The Jurisprudence of Lord Hoffmann (Oxford: Hart Publishing, 2015)

Oxford Legal Studies Research Paper No. 14/2015

19 Pages Posted: 2 Apr 2015

See all articles by Judith Freedman

Judith Freedman

University of Oxford - Faculty of Law; Oxford University Centre for Business Taxation

Date Written: April 2015


In the realm of tax law, as in other areas discussed in this book, Lord Hoffmann’s strongest theme has been one of purposive construction. Lord Hoffmann helped to review and revise an approach to tax avoidance at a time when it had moved away from purposive construction toward a judicial rule of doubtful propriety (the so-called ‘Ramsay principle’). At one point, however, Lord Hoffmann’s explanation of his approach to construction threatened to create another type of formula - a distinction between commercial and juristic concepts, which proved to be impractical. What might have worked if always in his expert hands would not necessarily work in the hands of others. An approach that cannot be applied at all levels of the legal system is unlikely to be a sensible way forward. There is a tendency amongst lower courts, and those on the ground who have to implement legislation, to look for concrete rules and formulaic guidance. Purposive construction alone may appear to give rise to uncertainty, especially in an area where the purpose of the legislation can be elusive. In such circumstances, references to ‘economic’ or ‘commercial’ concepts do not provide the kind of guidance that is sought. This means that, despite the serious intellectual effort and judicial focus that have been brought to bear on the problem of construing tax legislation to give effect to the intention of Parliament, the case law on tax avoidance remains unsatisfactory and resort is frequently taken to legislative ‘solutions’. Very often these legislative solutions take the form of specified tax avoidance provisions, but the apparent inability of the judiciary to solve the tax avoidance problem has led also to the introduction of a statutory general anti-abuse rule (GAAR). Lord Hoffmann participated in a study group advising on the development and adoption of a UK GAAR. This suggests an acceptance that the judiciary cannot tackle the problem of tax avoidance resulting from abuse of tax legislation without assistance. The legislative approach in the GAAR is not, however, one that relieves judges of the need to look at the purpose of the legislation. In fact it requires them to look very carefully at the purpose of the legislation, but provides a framework to guide them in this difficult endeavour and, in certain circumstances, allows them to go beyond the confines of pure purposive construction as it is usually applied in the UK. This solution neatly frames Lord Hoffmann’s views of the role of the judiciary in such cases.

Suggested Citation

Freedman, Judith, Lord Hoffmann, Tax Law and Principles (April 2015). PS Davies and J Pila (eds), The Jurisprudence of Lord Hoffmann (Oxford: Hart Publishing, 2015), Oxford Legal Studies Research Paper No. 14/2015, Available at SSRN: https://ssrn.com/abstract=2589006

Judith Freedman (Contact Author)

University of Oxford - Faculty of Law ( email )

Worcester College
Walton Street
Oxford, Oxfordshire OX1 2HB
Great Britain

Oxford University Centre for Business Taxation ( email )

Said Business School
Oxford, Oxfordshire OX1
United Kingdom

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