In the USA, an abusive tax shelter reduces liability to tax using complex transactions often judged to have no legitimate business purpose beyond tax avoidance. The IRS publishes a list of such transactions, making taxpayers liable for back taxes and interest. Similarly, the UK's GAAR aims to outlaw 'artificial and abusive' tax shelters.
In UK tax law, the Ramsey Principle allows the court to examine a series of connected transactions collectively to ascertain the taxpayer's liability, rather than isolating each individual transaction.
The Westminster Doctrine refers to the principle in UK tax law that individuals and entities may arrange their financial affairs to minimize tax liability. It originated from the 1936 ruling in Commissioners of Inland Revenue v the Duke of Westminster.
