Field Court Tax Chambers

Judgement has been handed down in the High Court in a landmark ruling on the case brought by Skatteforvaltningen (otherwise known as SKAT, the Danish Customs and Tax Administration) arising out of the Danish cum/ex trading activities.  Philip Baker QC acted for Acupay System LLC, which was one of the non-fraud defendants, in what has been described as ’one of the largest and most complex pieces of litigation to be heard in the Commercial Court’.  The litigation arose as a result of approximately £1.5bn of withholding tax refunds made as a result of an alleged fraud on the part of several of the other defendants.  The High Court dismissed in their entirety SKAT’s claims based on the refunds paid out, mostly to US-based pension funds.  Mr Justice Andrew Baker decided that the case was inadmissible due to the application of Dicey Rule 3 (otherwise known as the rule in Government of India v Taylor or the Revenue Rule) whereby foreign governments may not sue to collect foreign taxes in the UK courts.  SKAT argued that they were not suing for taxes, but instead for damages caused by the payment of withholding tax refunds to which the recipients were not entitled.  Mr Justice Andrew Baker’s view was that, in substance, SKAT was seeking to claim taxes and not damages, and thus the case was inadmissible.  The full judgement can be found here.


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