Introduction
There is an inverse relationship between quantity and quality with respect
to many things, including writing about tax avoidance. Everyone working
in the tax area has views about tax avoidance and almost everyone,
it seems, feels an irresistible urge to inflict these views on others. Most
of the writing on tax avoidance is in the nature of fast food: quickly prepared,
consumed, digested and forgotten – and, if consumed in excessive
quantities, dangerous to your (mental) health. In a fast-foodworld, master
chefs are revered and celebrated. Professor John Tiley is amaster chef with
respect to offerings about tax avoidance. His writings about controlling
tax avoidance constitute the fine-dining experience, the Michelin threestar
restaurant in a world of greasy spoons, chains and all-you-can-eat
buffets. It is fitting that we celebrate his contributions.
The subject of my paper is a comparison of a statutory general antiavoidance
rule and judicial general anti-avoidance doctrines as methods
of controlling tax avoidance. The paper assumes, fairly I think, that specific
statutory anti-avoidance rules and limited judicial anti-avoidance
doctrines such as sham are necessary but not even nearly sufficient to deal
effectively with tax avoidance. The issue can be framed in a number of
ways. Often in the context of a particular country, it takes the form of the
question: is a statutory GAAR necessary? The issue was put this way in
Canada in the mid-1980s when the GAAR was adopted and it has been
put that way in the UK since the Ramsay case in 1981.
Other people, especially Tiley, are much more qualified than me to
opine about whether the UK should adopt a GAAR. Instead, in this paper I want to emulate Tiley and approach the issue from a comparative perspective.
Comparative analysis has been a prominent feature of Tiley’s
writing on tax avoidance over his career. The subject lends itself to comparative
treatment because some countries (notably the UK and the US)
have vigorous judicial anti-avoidance doctrines and no statutory GAAR,
while other countries with similar legal traditions (Australia, Canada,
New Zealand and South Africa) have enacted statutory GAARs.
The organisation of the paper is straightforward. It commences with a
background section dealing with some preliminary issues relating to the
broader context in which anti-avoidance rules operate that are essential to
an understanding of both judicial doctrines and statutoryGAARs.Thetwo
following sections describe statutory GAARs and judicial anti-avoidance
doctrines from a general perspective. I have avoided detailed descriptions
and analysis of the anti-avoidance measures of specific countries because
of space restrictions and the availability of this material elsewhere. These
two sections are followed by an assessment of the two methods of controlling
tax avoidance and a brief comparison of the seemingly similar
situations in Canada under its statutory GAAR and the UK with its judicial
approach.
1.1 Background – preliminary matters
Introduction
One typical aspect of Tiley’s writings on tax avoidance that I especially
value is the care with which he situates the discussion of the most recent
case or statutory provision in a broader context – and for him that context
is very broad indeed.
In a short article published in 1985,1 soon after the Ramsay2 and
Furniss v Dawson3 cases, Tiley reminds everyone, but in particular,
panicking practitioners, that –
these decisions represent a classic example of legal development; there is
nothing unusual about the way the need for change has come about nor
about the way in which the change was made and it is suggested that history
may also warn us to avoid jumping to solutions
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