In Inland Revenue Commissioners v Duke of Westminster (1936) AC 1, it was decided that:
“Every man is entitled, if he can to order his affairs so as that the tax attaching under the appropriate acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax. This so-called doctrine of “the substance” seems to me to be nothing more than an attempt to make a man pay notwithstanding that he has so ordered his affairs that the amount of tax sought from him is not legally claimable.“
This principle (which came to be known as “The Duke of Westminster Doctrine”), allowed for individuals and corporations to structure financial arrangements so as to minimise tax liability, as long as these structures are within the four corners of the black letter law.