· So long as the form of the transaction is in fact carried out, it cannot be disregarded by the Commissioners or the court in favour of some more normal and likely form which would attract greater tax.
· DoW entered into deeds of covenant to pay weekly sums to a number of his servants and thereafter reduced their wages by the same amount as was payable under the deeds.
· HL, by a majority of four to one, decided that the courts could not disregard the form of the transaction and substitute their own view of substance, unless it was alleged and proved that the form was a sham and was not intended to be given legal effect. As, in the case, the deeds of covenant were certainly intended to be given effect to and were, in fact, acted upon, HL held that they were valid to reduce the Duke’s surtax.
· Lord Tomlin
· every man is entitled, if he can, to order his affairs so as that the tax attaching under appropriate Acts is less than it would otherwise be. If he succeeds in ordering them so as to secure the result, then, however unappreciative the Commissioners or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.
· Lord Atkin
I agree that you must not go beyond the legal effect of the agreements and conveyances made, construed in accordance with ordinary rules in reference to all the surrounding circumstances.