Denmark loses £1.4bn tax fraud claim in UK court case

Getty ImagesSanjay Shah was imprisoned in Denmark in a separate prison trial final yr Denmark’s tax authority has misplaced a £1.4bn fraud case on the Excessive Courtroom in London in one of many highest worth civil circumstances ever heard within the UK. Skatterforvaltningen, referred to as Skat, argued big sums of money had been falsely claimed in tax rebates – as a part of so-called “cum-ex schemes”.The principle named defendant within the case was defunct hedgefund Solo Capital Companions, run by dealer Sanjay Shah, who was jailed in a prison trial in Denmark final yr.Ruling on the case, Mr Justice Andrew Baker mentioned the Danish tax authority had not been misled into making the funds.The case was deciding on whether or not Skat was deceived into paying the tax refunds, because it had claimed.”Greed is usually a highly effective motive, and I think about there was substantial greed right here,” mentioned Mr Justice Baker. “Nevertheless, the proof at trial didn’t persuade me to simply accept Skat’s declare, and I don’t make the findings it sought.”The judgement famous that of the 4,170 dividend refund claims between mid-2012 and mid-2015 examined as a part of the trial, none had been legitimate claims below Danish tax legislation – and all of them might have been rejected. Nevertheless, Mr Justice Baker mentioned the tax authority’s “controls for assessing and paying dividend tax refund claims had been so flimsy as to be nearly non-existent”.He mentioned Skat had “didn’t established any of the claims pursued at trial the place legal responsibility was disputed”. In a press release, the Danish authorities mentioned its tax authority “strongly disagrees with the premises of the judgment and is now in search of to enchantment it”. How cum-ex schemes workedCum-ex schemes had been a technique of exploiting weaknesses in tax regimes of various European nations and are believed to have price European governments billions.They had been carried out with the only real goal of producing a number of refunds of a tax that had solely been paid as soon as.The schemes would work by benefiting from the interval when an organization paid out dividends to shareholders. Shares could be offered by one investor instantly earlier than the dividends had been paid (cum, or with, dividend), and delivered to a purchaser afterwards (ex-dividend) – successfully creating confusion over who owned the shares for the time being when the dividend was paid. It allowed each events to assert rebates on withholding tax – a levy which had solely been paid as soon as, when the dividend was issued.’Not reliable’ Solo Capital Companions was based in 2009 by London-based dealer Shah.It was broadly seen as a key participant in refining and exploiting the cum-ex commerce – with its actions centered totally on Denmark. In 2023, he was extradited to Denmark from Dubai to face trial, and in December final yr he was convicted, and given the heaviest penalty ever in Denmark for a fraud case.In Thursday’s judgement, Mr Justice Baker mentioned Shah was “not a reliable particular person” and his testimony had contained “implausible claims and apparent lies”. “I don’t think about it protected, usually, to deal with something Mr Shah says for himself or in regards to the Danish dividend tax refund manufacturing facility he created as dependable proof of reality,” mentioned Mr Justice Baker. Nevertheless, the judgement discovered whereas this data gave “some oblique assist ” to the case put ahead by Skat – it didn’t show the tax authority’s case. The 18-month trial was the end result of an eight-year authorized course of – with Skat initially being denied the proper to pursue its declare within the English courts, earlier than profitable an enchantment to the Supreme Courtroom. Authorized sources recommend the prices might run into a whole bunch of hundreds of thousands of kilos.It initially concerned greater than 100 defendants, together with some 40 people and numerous company entities.