Author: Salomé Lemasson 4 February 2022
Salomé Lemasson of financial crime specialists Rahman Ravelli explains that the action is part of a bigger strategy by the Danes.
Denmark is seeking to revive its £1.5 billion Cum-Ex case against British hedge fund trader Sanjay Shah.
The Danish tax authority Skat has asked the UK Court of Appeal to overturn a High Court ruling that blocked its claim, which alleged tax fraud.
The High Court had told Skat that it was not allowed to recover taxes through the English courts. But Skat’s lawyers argued in the Court of Appeal that the High Court was mistaken when it said its claim was an attempt to recover unpaid taxes. They told the appeal court the claim was actually for funds paid out as a result of fraudulent applications for refunds on tax withheld from stock dividends – not for taxes that had not been paid.
Skat has alleged that from 2012 to 2015 it was the victim of Cum-Ex fraud orchestrated by Shah. This involved company shares being sold or swapped just before a dividend pay-out in order to give the impression of numerous owners, so that various parties could then claim tax rebates.
The High Court dismissed Skat’s case, citing a 300-year-old legal principle that prohibits courts from hearing actions brought by foreign nations to enforce their own tax laws. But Skat is now arguing that this is a fundamental error of law. It is claiming it has the same right as any other party to seek damages when money has been obtained by fraud.
Shah, who lives in Dubai, has been charged by Danish prosecutors over the scheme. He denies any wrongdoing and says he was exploiting a loophole in Denmark's tax system.
Since 2018, Skat has been one of the most active and creative European authorities when it comes to tackling Cum-Ex related cases. It has brought more than 500 lawsuits against individuals and businesses in Denmark, the UK, the United States, Dubai, Germany, Malaysia and Canada. It aims to recover approximately $2 billion.
Skat estimates that by 2027 it will have spent approximately $380 million bringing cases in the UK courts. It is cooperating with the UK’s Financial Conduct Authority, HM Revenue and Customs and criminal authorities as it to seeks to regain what it says it is owed.
This article originally featured on Mondaq, it can be read here.
Of Counsel Head of EU Business Crime and Regulatory Practice Group
Salomé works on Europe’s most challenging and significant white-collar and complex crime cross-border cases. She leads Rahman Ravelli’s EU Business Crime and Regulatory Practice Group, representing and advising companies and individuals in high-stakes investigations.