CL-2018-000297, CL-2018-000404, CL-2018-000590, - [2025] EWHC 2364 (Comm)

The only Danish tax advice obtained during the design or implementation of Solo Model cum-ex trading was advice given by the Danish law firm Hannes Snellman, in: (a) an opinion letter dated 27 June 2012 (the ‘First HS Advice’); (b) an email dated 1 July 2013 (the ‘First HS Email’); (c) an updated opinion letter dated 20 December 2013 (the ‘Second HS Advice’); (d) an opinion letter dated 29 January 2014 (the ‘Third HS Advice’); and (d) an email dated 12 February 2014 (the ‘Second HS Email’). There were also drafts for a further Hannes Snellman opinion letter in January and February 2014, but they add nothing to the body of Danish legal advice obtained, given that they were only drafts, although they played a separate part in the factual narrative, as mentioned in paragraphs 183 and 211 above.

The First to Third HS Advices were addressed to Elysium Dubai, but stated that they had been prepared at the request of SCP. The First and Second HS Advices concerned possible trading by USPFs and the Danish tax consequences thereof. The Third HS Advice concerned LabCos.

Hannes Snellman were not asked to advise, by reference to any actual trading, on the validity or otherwise of the tax refund claim, actual or prospective, of any Solo Model USPF or LabCo. Nor were they given a detailed or complete transaction structure for Solo Model trading, as they could have been since every element of it was designed at, and would be directed by, Solo.

Hannes Snellman were asked instead to consider the “Danish tax implications” for a USPF (or LabCo), and for SCP, if the USPF (or LabCo) entered into trades described in general terms in the introductory parts of the advice, which did not disclose that those trades would be part of a structure designed and coordinated by Solo for the sole purpose of generating a possible tax refund claim by the USPF (or LabCo). Among the trial defendants, Sanjay Shah, Rajen Shah and Mr Horn had responsibility for what Hannes Snellman were asked and how they were asked it. In cross-examination, Rajen Shah and Mr Horn both argued that they sought advice candidly and obtained advice that Solo Model trading did generate valid tax refund entitlements, when perfectly obviously neither was the case.

Sanjay Shah in cross-examination was somewhat more frank about the limited nature of what Hannes Snellman were asked to consider, but not very coherent in his argument overall. In my judgment, he found himself unsure whether to push the line that although there were limitations to it, Hannes Snellman’s advice did confirm that Solo Model tax reclaims would be valid under Danish tax law, or to stick to the different line, closer to the truth, that Solo was not seeking that type of advice at all, but rather something more akin to a ‘marketing tool’ for recruiting potential clients, i.e. tax-advantaged equity buyers for Solo Model trading. That tension in Sanjay Shah’s evidence was created by the fact that he has claimed to have thought that Solo was cleverly exploiting a Danish tax law loophole, but he knows that Solo never sought advice on whether any loophole that might exist extended to cover transactions where no shares were ever acquired.

I was unimpressed by those efforts to explain away the fact that Solo did not do what one would expect if it had been looking for advice on whether the Solo Model generated valid tax reclaims. I draw the firm conclusion that that is not what Solo was doing. For a more positive finding, the best explanation for what they did, in my judgment – in fact, I think, the only plausible explanation – is that their focus was on whether Solo Model equity buyers, who would know and see only something like the transactional facts that Hannes Snellman were asked to assume, would or might reasonably conclude that they had a right to a tax refund, or at least an arguable position on the basis of which they might be comfortable filing a claim with SKAT. That is not dissimilar to Sanjay Shah’s sometime notion that the Hannes Snellman advice was a marketing tool. It is not quite the same in that, I find, it was never intended to be, and generally was not, shared outside Solo.

Rajen Shah sent a copy of the First HS Advice to the Argre Principals; but they were rather different to all other principals behind Solo Model (and Maple Point Model) equity buyers, given their backgrounds and history of involvement with Solo. In sending it to them, Rajen Shah invited them to find it a “riveting read”, obviously a bit of irony (Mr Shah said in cross-examination that it was “tongue in cheek”). In my judgment, there was only sensibly room for such flippancy if Mr Shah did not think the Argre Principals would be interested in it, because they would know it was not for them to rely on confidential legal advice where they were not the advisor’s client and would be deciding for themselves whether to participate, and if so by reference to what, if any, legal advice that they might choose to obtain. I considered whether, perhaps, it might corroborate Mr Horn’s evidence that the Argre Principals knew before they decided to participate, and when participating, how Solo was going to enable their USPFs, or the USPFs of others whom they might introduce, to trade without funds or funding external to the traded structure itself. In my view, it does not, although I think it plausible that the Argre Principals may have assumed that Solo had a full transaction structure in mind supporting the trading activity posited for the USPF and if so may have noted that that wider supporting structure was not set out or explained. That would naturally be considered to be Solo’s ‘IP’, and I do not think there is a sufficient basis in evidence to find that the Argre Principals were troubled by not having all the detail. To proceed on that basis would be speculative.

SKAT relied heavily on the inadequacy of Hannes Snellman’s advice, if it was supposed to be advice on whether the Solo Model generated valid tax reclaims. I agree with SKAT that it did not provide any reasonable basis for considering that Solo’s magic ingredient of share-less equity trade settlement had no impact on possible tax refund entitlement. However, I do not consider that the way Sanjay Shah and his colleagues went about obtaining Hannes Snellman’s advice evidences preparation to commit the fraud that SKAT has alleged in these proceedings. They did not consider (and SKAT did not allege) that tax reclaims would state that there was a tax refund entitlement. They did not tell the truth at trial about the Hannes Snellman advice, in the face of a certain relentlessness of SKAT’s insistence that it was central to the case. They had, in consequence, a general unwillingness to admit what might be thought the unattractive truth that they constructed what became a tax reclaim industry on a massive scale without ever having, or having any solid basis for, an opinion that the reclaims were valid under the applicable rules of Danish tax law. But in my judgment they never saw what they were doing as setting things up so that SKAT would be or were being told untruths.

Denmark was not the only jurisdiction that Solo investigated. The Solo Model was also deployed in Austria and Belgium, and a decision was made not to make the attempt in some other jurisdictions. In closing argument, Mr Graham KC for SKAT initially developed a submission that in that planning phase, Solo was actively seeking to identify soft targets to exploit. That submission was not pressed, however. Mr Graham accepted, on reflection, that it was a new point, materially different to anything put in cross-examination. However, I agree with the submission that remained open to SKAT, namely that the evidence on which it had been based negatived any suggestion that declining to extend the Solo Model to other jurisdictions evidenced a focus on the validity under local law of tax refund claims. Without contemplating the more cynical notion of picking soft targets, in my judgment the evidence did show that Solo’s focus was the tax authorities’ processes and the documentary requirements involved in them. If Solo Model trading would generate the documents enabling claims to be filed, the view at Solo, I find, was that it was worth putting Solo Model trades on and seeing whether they resulted in successful outcomes, i.e. tax reclaims that the tax authority decided to accept and pay.

The First, Second and Third HS Advices were all structured in the same way, so far as material:

The USPF’s transactions posited in the First HS Advice, then, were as follows:

“3 CONTEMPLATED TRANSACTIONS

USPF contemplates to make the following transactions:

1)

USPF purchases Danish exchange traded equities (the “Equities”) (either via a regulated inter-dealer broker or via purchasing Eurex single-stock, physically delivered listed flex future contracts regarding the relevant Equities);

2)

The purchase of the Equities will take place prior to the ex-dividend date but no later than the dividend approval date meaning the date where the dividend is finally approved for distribution (generally meaning the date of the annual general shareholder’s meeting) (“Dividend Approval Date”). The settlement date for the purchase of the Equities will be on or after the dividend record date. In the case of physically delivered listed futures contracts, the expiry date of the futures contract will be no later than the Dividend Approval Date;

3)

USPF will receive the dividend which has been declared on the Equities on Dividend Approval Date (the “Danish Dividend”);

4)

On purchase of the Equities, USPF will hedge its long exposure on the Equities by selling exchange-traded, cash-settled single stock futures over the Equities (the “Short Derivative”). The price of the Short Derivative will take into account a proportion of the expected Danish Dividend in calculating the strike price of the Short Derivative but no adjustment will be made if the actual dividend amount is more or less than the expected dividend amount;

5)

On or after the ex-dividend date USPF will sell the Equities via an inter-dealer broker. The settlement date for the sale of the Equities will be the same date as the settlement date of the purchase of the Equities in 2) above. At the same time, USPF will enter into a long futures position over the Equities in order to close out the short futures position created in step 4 above The long futures position will expire on the same date as the short futures position created in step 4 above;

6)

It is possible that in the period until sale, the Equities would be lent out under a stock loan (using a standard Global Master Securities Lending Agreement) to an unrelated party (which could be located in any jurisdiction) in order to minimize financing costs. The period of the stock loan is not expected to exceed 3 months and the stock loan would be cash collateralised. The stock loan transaction may be entered into on or after dividend record date (with settlement of the stock loan occurring on the same day) but always after Dividend Approval Date and the borrower of the Equities would not receive any dividend on the Equities.”

The language of ‘purchase’ and ‘sale’ seems to connote contracting (to buy and sell), as with my use of that language in this judgment, because the ‘purchase’ is said to occur prior to a dividend ex-date, for settlement on or after the associated record date. The transaction pattern posited, read literally, makes no sense. It proposes that:

That impossibility, then, is created by the fact that the posited sale, terminating the USPF’s investment, is for settlement on the same date as its (possibly cum-ex) purchase. That element of the fact pattern was introduced by Rajen Shah at the last minute, relatively speaking, in an iterative process of working up the First HS Advice with Hannes Snellman. Mr Shah introduced it as part of tracked changes he sent to Hannes Snellman on 25 June 2012, and the First HS Advice was finalised and issued on 27 June 2012.

Hannes Snellman were first given a fact pattern to consider in an email from Mr Horn on 23 May 2012. In that fact pattern, and thereafter until Rajen Shah’s late amendment, the clear impression given was that there would be an interval of unspecified length (but not expected to exceed three months) between the USPF acquiring the shares and the USPF later selling them, during which interval the USPF might lend the shares out to minimise financing costs. Although not much of his evidence about this, or anything else, was satisfactory, on balance I accept Rajen Shah’s evidence that, at all events in the final version, the stock loan possibility was intended to be a strict alternative to immediate re-sale. He accepted that it would have been better to spell that out, for example by amending paragraph 6) of the fact pattern so that it began, “It is possible that, instead, the Equities will be sold later, and until that sale, …”.

Rajen Shah claimed that he made that clear to Hannes Snellman on the telephone. I do not accept that evidence. It is clear from the correspondence that there were telephone discussions with Hannes Snellman (also involving Mr Horn), but there is no hint that Hannes Snellman had taken this ‘alternative structures’ point on board, and, as will become clear below, I find that Hannes Snellman did not do a good or careful job with this advice, so I do not infer that they must have understood the point because they did not protest that paragraph 6) of the fact pattern had become nonsensical. I think it more likely that Hannes Snellman did not spot the tension created by Mr Shah’s amendment to paragraph 5) of the fact pattern. In itself, that amendment was apt only to cause Hannes Snellman to apply their mind to whether settlement of an ex-div sale on the same date as settlement of (what might be) a cum-ex purchase would affect the Danish tax law analysis; and if the clash it created with paragraph 6), as it stood, had been noted, I think it unlikely that Hannes Snellman would have left it as it was.

On any view, the fact pattern gave as fixed points that:

The fact pattern did not clarify or elaborate what was meant by the proposition that because of the equity purchase the USPF would “receive the dividend”, either generally or in particular if the purchase was cum-ex, which was within the fact pattern.

The brief to Hannes Snellman therefore was, or included, a brief to advise whether a USPF which bought Danish shares cum-ex but nonetheless in some unspecified sense “receive[d] the dividend”, and sold ex-div for settlement at the same time as its purchase, would be entitled to a refund of Danish dividend tax, and whether a stock loan by the USPF entered into on or after the ex-date would affect the answer.

Against the background of the hypothetical transactions described in Section 3, in Section 4 the assumptions that are material for present purposes were stated as follows:

“4 ASSUMPTIONS

For the purpose of this Opinion, we have assumed that:

…

5)

On purchase of the Equities, USPF will obtain unconditional ownership to the Equities and will have full ownership rights over the Equities on Dividend Approval Date including the right to receive the dividend declared on that date;

6)

The Equities will be held by USPF through a custodian. USPF’s ownership to the Equities will be recorded with the custodian and, depending upon the custodian’s and sub-custodian’s other long and short positions, the Danish Securities Centre;

7)

The custodian’s records will show that USPF is the legal and beneficial owner of the Equities on Dividend Approval Date and that the Danish Dividend represents a real dividend on the Equities which is passed on to USPF by the custodian.”

Those assumptions are not ordinary matters of fact. For the most part, they state matters or consequences of law. Assumption 5), for example, is all law. It said that on purchase, i.e. by concluding the purchase trade, the USPF would obtain (a) unconditional ownership of Danish shares, with (b) full ownership rights over those shares on the dividend declaration date, and (c) the right to receive the dividend declared on that date. In an advice as to the Danish tax law consequences for the USPF, given those assumptions, the assumptions could not sensibly have been stating conclusions of Danish tax law. They could only sensibly have been understood as defining the position under the general law that Hannes Snellman said they were assuming would exist, upon the basis of which they were offering an opinion on the Danish tax law treatment.

Assumption 6) stated as assumption that the USPF’s “ownership to the Equities”, which harked back to Assumption 5), would be recorded with its custodian, and may or may not be recorded at VPS, depending on the detail of the custody chain. Assumption 7) reinforced the position, making clear that it was assumed that, in particular even though VPS may not have any record of the USPF’s share title, the USPF’s custodian’s records would show it to have had title on the dividend declaration date, and would show that the payment it received was a real dividend payment being passed on by the custodian. Sanjay Shah, Rajen Shah and Mr Horn all knew at the time that none of that would be true for Solo Model trades:

By the supporting explanation and analysis, Hannes Snellman advised that as a general rule, the liability to Danish dividend tax was that of “the person or entity … registered as the holder of the dividend paying shares on Dividend Approval Date”. They said they believed “that USPF must be considered the recipient of the Danish Dividend from a Danish domestic law perspective”, so that “the Danish Dividend should be taxed in the hands of USPF”; but that was “[b]ased on our understanding that USPF will have full ownership rights over the Equities on Dividend Approval Date and … would only lend out the Equities after Dividend Approval Date with no dividend rights attached”.

The First HS Advice did not refer to any special rule of Danish tax law as to when ownership of equities (and therefore entitlement to dividends) was taken to have accrued. It did not consider how, if at all, including in what settlement circumstances, it might be possible, given the transaction pattern described, for the USPF buyer to “have [under the general law] full ownership rights over the Equities on Dividend Approval Date” (Assumption 5), or to receive something that “represents a real dividend … passed on … by the custodian” (Assumption 7).

As I read the First HS Advice, “the Equities” meant throughout real Danish shares, not something synthetic or derivative, referable to but not constituting shares. That means that Assumption 5) was an impossibility, creating severe difficulties for Assumption 7), even without knowing in detail the Solo Model settlement mechanics. Yet Hannes Snellman did not qualify their opinion by reference to any of that, or refuse to offer an opinion because of it. In expressing their opinion, Hannes Snellman said in terms that it was on the basis of the stated assumptions, but it is not competent or careful advice for an expert adviser, giving advice on stated assumptions, to fail to note and explain that parts of them seem to be impossible, if it is within the adviser’s professional competence to identify and understand that. The obvious danger of stating assumptions without cautionary advice about them is that the adviser may be taken by the client to be advising, implicitly, that (other things being equal) the assumptions should be satisfied, or at all events that there is no reason that it would be within the adviser’s competence to identify why they could not be satisfied or it is otherwise unreasonable to make them as assumptions.

Assumption 7) was added by Hannes Snellman after exchanges and discussions between their Anne Becker-Christensen, Rajen Shah and Mr Horn. Ms Becker-Christensen explained in a covering email on 26 June 2012, attaching in final draft form what became the First HS Advice, that Hannes Snellman had added Assumption 7) because, “We need the opinion to reflect somehow that the payment for which USPF will claim treaty benefits is de facto a dividend payment which USPF has received, as a shareholder, from the dividend distributing Danish company (via the custodian)”. SKAT relied on the history to that observation, which was as follows:

The upshot, as SKAT submitted, is that (a) the First HS Advice can only sensibly be read as assuming that the USPF would acquire full title to real shares in respect of which (therefore, by definition) there would be a complete custody chain, and that, although VPS might or might not have a record that the USPF sat at the top of the custody chain, what was paid to the USPF would be a real dividend payment, passed on to it by its custodian, and (b) lest there might have been any doubt about that, Ms Becker-Christensen had made it clear in her emails that that was Hannes Snellman’s intent.

Hannes Snellman thus did not advise, because they were not asked to advise, that the Solo Model would or did result in the acquisition of any ownership rights to shares. They advised only that, if under the transactions described such rights were acquired, then for tax purposes they would be treated as having been acquired in time for the USPF to be considered the party liable to Danish dividend tax and entitled in principle to claim a refund.

The email dated 1 July 2013 referred to in paragraph 299 above was from Ms Becker-Christensen to Jessica Hammers in SCP’s legal department, following a telephone call between them. By the email, Ms Becker-Christensen confirmed her advice in these terms:

“As a general rule, dividends distributed by a Danish company are subject to Danish tax in the hands of the owner of the shares, i.e. the person who has legal ownership to the shares on the date where the dividend is declared … . The taxable event is the declaration of dividend and not the receipt of the dividend. Therefore, the Danish dividend tax is not cancelled if the dividend for some reason is never received by the owner of the shares.

With respect to dividends on Danish shares which are subject to a stock loan arrangement, … the dividends according to Danish practice are taxed in the hand of the lender and not the borrower if the borrower has an obligation to pay a manufactured dividend to the lender.”

That was inaccurate advice in that, without further explanation, one would not know that Danish tax law took a bespoke view, different from that of the general law, on the identification of the owner of shares. The email adopts the simple understanding of an accrual rule of taxation that I remain residually concerned might in fact be the true rule of Danish tax law, even though I was persuaded, on balance, to find otherwise, so that I am now bound to say that the email was inaccurate: see as to that, SKAT (Validity Issues), supra, at [184], [193]-[195], [308]. Be that as it may, there is no hint in the email that Hannes Snellman understood they might be advising in relation to trading in which no party ever owned shares at all.

The Second HS Advice was, for my purposes, materially similar to the First HS Advice, as regards the possible entitlement of the posited USPF to a refund of Danish dividend tax. It now made clear that SCP might be the USPF’s custodian and, again expressly on the basis of the hypothetical facts in Section 3 and the assumptions in Section 4, advised additionally in Section 5 that:

“1)

The custodian services which may be carried out by [SCP] in relation to the Equities (a) does [sic.] not entail that [SCP] has established a permanent establishment in Denmark for Danish tax purposes and (b) should not trigger any adverse Danish tax consequences for [SCP]; and

2)

In the event that USPF’s reclaim of Danish withholding tax withheld by the Danish tax authority is rejected, no economic penalties should be imposed on USPF or [SCP].”

The Third HS Advice was materially similar to the Second HS Advice, but it considered hypothetical share transactions by LabCos rather than by USPFs. At step 3 in the transaction description, it was made explicit that the dividend it was said would be received by the LabCo would be “of an amount equal to the gross dividend net of the relevant rate of Danish withholding tax”; and at step 6, a repo was stated to be an alternative to a stock loan: “Alternatively, the Equities may be refinanced under a sale and repurchase agreement (i.e. a repo) documented under a Global Master Repurchase Agreement … entered into on or after dividend record date (with settlement of the stock loan [sic.] occurring on the same day) but always after Dividend Approval Date and the buyer [viz., the repo buyer, not the USPF] would not receive any dividend …”. That, I think, reinforces the conclusion I reached, on balance, about the First HS Advice, namely that steps 5 and 6 of the hypothetical fact pattern in Section 3 should be read as alternatives to each other.

Finally, the email dated 12 February 2014 referred to in paragraph 299 above was from Ms Becker-Christensen to Priyan Shah at Agrius Capital (the services company through which he and Mr O’Callaghan worked for Sanjay Shah/Solo), but copied to Sanjay Shah, among others. By that email, Ms Becker-Christensen confirmed that the analysis detailed in the Second and Third HS Advices would not change if the price hedging was via cash settled forwards rather than exchange-traded futures, provided that “the counterparties to the cash settled forwards are: 1) unrelated, independent parties and 2) are not counterparties to the equity trades in question”.

I was also shown written opinions from Hannes Snellman in June 2013 and February 2014 addressed to Belador Advisers UK Ltd (the ‘Belador Advice’). The Belador Advice was not seen at the time by any of the trial defendants. It was provided by Hannes Snellman in relation to the structured trading organised by MCML (when it was still ED&F Man), on which see paragraph 26 above. The Belador Advice referred to a ‘USPP’ rather than a ‘USPF’ (i.e. ‘Plan’ rather than ‘Fund’). It had the same general structure and format as the First to Third HS Advices, and much of the content is similar, but there were differences.

One of the differences was an addition in Section 3 that, “USPP may receive the Danish Dividends as a compensation payment from its custodian based on the fact that (a) the Share Purchase may settle on a T+4 settlement basis or (b) the settlement of the transfer of the Danish Equity under the … Share Purchase … may be delayed because of settlement failure”. There was then an additional opinion given, relating to that possible fact, that “If the … Share Purchase due to an agreed settlement in accordance with a T+4 settlement cycle or a settlement failure settles after the dividend record date, USPP should be able to claim a full refund of the Danish dividend withholding tax on received dividend compensation payments pursuant to the Denmark – US Tax Treaty provided that the conditions discussed in Section 7.1 below are met”.

Hannes Snellman should not have used language suggesting that the dividend compensation payment would have been the subject of Danish dividend tax or that its receipt would have generated an entitlement to a tax refund. The point of substance in the additional opinion is advice that it would not defeat the USPF’s entitlement to a tax refund if the only payment it received, because of settlement being after the record date, was a dividend compensation payment. That entitlement, according to the advice, still was to a full refund of the Danish dividend tax that had been imposed on the real dividend, arising because of the assumption (as in the First to Third HS Advices) that the USPF became the full legal and beneficial owner of real shares prior to the dividend declaration.

In ‘Section 7.1’, setting out the conditions the USPF would need to satisfy to be entitled, Hannes Snellman advised inter alia that it would be “crucial” that it could provide, inter alia:

“Documentation that the Danish Equity was purchased pursuant to an unconditional and legally binding agreement entered into prior to the ex-dividend date and that the Danish Equity according to such agreement was purchased on a cum dividend basis. Further, USPP must be able to document that the Danish Equity has subsequently been delivered, ideally only a few days dividend record date [sic., after that date].”

That confirms that in Hannes Snellman’s view a cum-ex buyer whose purchase was settled by a transfer of shares on the settlement date was a shareholder for tax purposes in respect of a dividend declared between the trade date and the settlement date, under a ‘contract accruals rule’ of Danish tax law, if it had not committed prior to the dividend declaration to a disposal of those shares to another. That oddly contrasts with the view seemingly given to SCP in the First HS Email (see paragraphs 326 to 327 above). I am also bound to find that the view given in the Belador Advice was incorrect under Danish tax law as determined for these proceedings. That is because I held on the evidence at the Validity Trial that the contract accruals rule does not mean that a trade prior to a dividend declaration that settles by a transfer of shares in due course is sufficient to create tax ownership of shares, because the seller may have been short when the trade was entered into and when the dividend was declared, yet still have achieved that physical settlement when the time came: see SKAT (Validity Issues) at, e.g., [247], [306]-[307], [309] and [310]-[313].

I have to find that the Belador Advice was inaccurate in that way, but it evidences that it would have made no difference to any of the First to Third HS Advices if Section 3, the fact pattern put to Hannes Snellman, had made it clear that the USPF’s (or LabCo’s) equity purchase would always be a cum-ex trade. That does not mean it was Hannes Snellman’s view that tax ownership of shares could be created by a trade that did not settle by a share transfer, DVP.

Whether Hannes Snellman would have articulated it precisely as I did on the expert evidence at the Validity Trial, I consider it clear on the whole of the evidence available as to Hannes Snellman’s opinions that in their view, as I found, “if a buyer never receives, by physical performance (share transfer), the shareholding seemingly contracted to be sold to them, they will not incur dividend tax liability on dividends declared after the contract was concluded (or at all)” (SKAT (Validity Issues), supra, at [228]). I am confident overall, and find, that Hannes Snellman would not have issued a positive opinion letter on the eligibility of a USPF (or LabCo) for a dividend tax refund if they understood that on the facts (actual or assumed) by reference to which they were advising, no shares would ever be transferred to the USPF (or LabCo). As Ms Becker-Christensen made clear to Rajen Shah and Mr Horn, in Hannes Snellman’s analysis the USPF (or LabCo) had to have acquired a real shareholding. Therefore, not only can it be said that given the hypothetical factual basis and explicit assumptions upon which they advised, Hannes Snellman did not advise that the Solo Model share-less settlement method resulted in tax refund entitlement, in my view it is clear, and was clear at the time to Rajen Shah and Mr Horn, that, if asked, Hannes Snellman would have advised that it did not.

That factual basis, and those assumptions, mean that Hannes Snellman had been asked to assume that the USPF (or LabCo) was a dividend date shareholder (as I defined that term in SKAT (Validity Issues), supra, at [166]). In effect, all they were being asked to consider was whether, if a dividend date shareholder was hedged against share price movement and traded, after the ex-date, to sell their shares or lend them out ex-div, the price hedge or the ex-div disposal affected things. Their advice was nonetheless poor, irrespective of points of detail that might be made on the basis of SKAT (Validity Issues), because it should have been obvious to Hannes Snellman that as a matter of law the posited dividend date shareholding was an impossibility.

Not only did Hannes Snellman not qualify their opinion because of that, or explain it, they introduced the relevant assumption. It did not come from Solo, but arrived as Assumption 5) with Hannes Snellman’s first draft for their advice, and remained throughout the process of finalising it. It is a little difficult to know what to make of that, without evidence from Hannes Snellman to explain their thinking. It is plausible, I think, that Hannes Snellman may have introduced the assumption to ‘join the dots’ in the fact pattern between paragraphs 1) and 2) (describing the equity purchase trade) and paragraph 3) (asserting that as a consequence the buyer would “receive the dividend”); but there is in truth no evidence to go on and I do not think I can make any finding as to what was their thinking.

Whatever the thinking, I do consider it surprising that Hannes Snellman did not spell out that not only was their opinion an ‘IF’ opinion (if the facts are as stated, and if the assumptions stated hold true, then …), but also that, for reasons of law upon which they were qualified and might be expected to advise, on the face of it the key assumption they had themselves introduced could not hold true. It is like asking a firm of shipping market tax lawyers to advise on the tax implications of some cash flow under a time charter, and being given by them an opinion that states as an assumption that the time charterer enjoys a right to possession of the ship and opines that on that assumption the cash flow will have a certain tax treatment, without a note of caution that the assumption, on the face of things, could not hold true because a time charter does not grant a right to possession, it creates only a contractual right to direct employment.

Standing back, as I said at the start of this section of the judgment, it would have been simple, if Solo had been interested to know the tax treatment of the actual trading, to set it out, accurately and in full, and ask that question. That was not done, and in my view Sanjay Shah, Rajen Shah and Mr Horn knew it had not been done. In truth, they were only taking advice from Hannes Snellman to get an idea as to whether a Solo Model equity buyer who saw and knew about only their own trades might believe that they were entitled, or at least take the view that they had a ‘filing position’, i.e. a plausible argument that they might have an entitlement.