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

Nothing turns on the documents provided to SKAT with the subject tax refund claims that confirmed the tax status in their respective home jurisdictions of the Tax Agent’s named clients, for example U.S. Form 6166s by which the IRS certified that, to the best of its knowledge, USPFs qualified under section 401(a) of the U.S. Internal Revenue Code to be exempt from taxation in the U.S. under section 501(a). Likewise, the Powers of Attorney by which the Tax Agents evidenced their authority to submit claims on behalf of their clients.

Therefore, the tax refund claim documents for each claim were, so far as might be material, the Tax Agent’s cover letter, a completed Form 06.003 (or, in the few cases where it was used, Form 06.008), and a CAN.

In its pleadings and argument, SKAT relied on particular turns of phrase used by the Tax Agents in their cover letters, in support of the submission that the core representations were made to it. For example, Goal’s cover letters described CANs as “evidence of payment and tax deduction paid on the client’s securities”, or again Syntax’s and Koi’s cover letters described the claim being made as a claim for a “refund of Danish Dividend Tax that was previously withheld in relation to their investments”.

However, Mr Nielsen’s evidence left me in no doubt but that he paid no regard at all to what was said in the cover letters when processing any of the tax refund claims. There was no evidence, or reason to suppose, that anyone at SKAT other than Mr Nielsen paid any attention to the cover letters, save that in the few cases where Form 06.008 was used, someone may have had to take the Tax Agent’s bank details for payment from the cover letter as those details were not asked for in the Form itself, as they were in Form 06.003, and the Tax Agent may or may not have thought to enter them onto the Form. In reality, SKAT, through Mr Nielsen, received and processed tax refund claims as claims consisting of the completed Form, supported by a CAN or CANs and the documents referred to in paragraph 474 above. The cover letters may as well have said just, “Please find herewith completed Form 06.003 [or 06.008] for consideration” (and, where Form 06.008 was used, “Bank details for any payment as follows: …”, if the Tax Agent had not added those details to the Form). They would have been processed by Mr Nielsen, and paid by SKAT, exactly as they were in fact.

It follows that if, considering the matter objectively, one of the representations alleged by SKAT was conveyed by the tax refund claim documents only due to something said in the cover letter, it did not induce Mr Nielsen’s approval of the claim, and any claim founded on that representation fails for that reason.

The documents submitted to SKAT did not refer to or provide any information about any particular trade or trading structure to which the Tax Agent’s named client had been or was privy. SKAT did not require any such information to be provided. That needs to be taken into account when considering the objective purport of those documents, such as might give rise to a representation made to SKAT. The question is what would the documents convey to SKAT, acting reasonably, bearing in mind inter alia that they did not say anything about any trades or trading structures involved.

Finally before considering each representation in turn, I deal with SKAT’s preparatory plea about CANs (paragraph 456 above). That was a plea as to what, SKAT says, the CANs were, and what they conveyed, as documents issued by a custodian to a client, which may inform any consideration of whether the tax refund claim documents conveyed the pleaded representations to SKAT, given that each claim was supported by a CAN.

Examples of the different forms of CAN, it will be recalled, appear in Appendix 5, below. It was variously contended both by SKAT and also by defendants that the content and connotations of the different forms of CAN were materially similar. However, each of those contentions was made as part of an argument that the representations alleged by SKAT were made (according to SKAT) or were not made (according to defendants). The rival submissions about similarity cannot be put together to say that it was common ground that the CANs were materially similar in purport. Neither submission was a concession that the case on which, if any, of the pleaded representations was made stands or falls uniformly across all custodians. I therefore reject attempts that were made, on occasion, on either side, to pair a submission about one form of CAN with the opposing side’s submission as to similarity, for an argument that if the former was persuasive, its conclusion could be applied across the board. SKAT’s preparatory plea, as to the purport of CANs in themselves, and then its claim that the representations it alleged were made to it, must be judged separately, in my view, for each form of CAN.

SKAT alleged, firstly, that each CAN purported to record that a stated number of shares in a named Danish company was held for the client to whom the CAN was issued (paragraph 456(i) above). In my judgment, that was not true for any of the CANs, although for the NCB CANs it may be that is so only because SKAT made clear, by the Further Information to which I have been making repeated reference, that the allegation was, more specifically, that CANs reported share ownership as a matter of Danish tax law on and before the ex-date.

A CAN issued by SCP advised the addressee that SCP had credited its account and that “This payment represents the dividend as shown below:”, under which details were set out of dividend income that it might meaningfully be said that a payment credit represented, namely dividend income, net of withholding tax, on a stated number of shares in an identified Danish company (also identifying, in early versions of the SCP CAN, the “Pay Date” for the referenced dividend, and in later versions also the “Ex Date” and the “Record Date”). None of that purports to record any holding of shares by the custodian for the addressee. It is a cash account credit advice, not a custody statement setting out securities holdings. The receipt of a payment referable to a dividend declared by a listed company did not imply that the recipient had a shareholding in that company (see paragraph 453(i) above). An SCP CAN was entitled “DIVIDEND CREDIT ADVICE”, but that does not change the limited substance of what it stated, and the use of the word ‘dividend’ in a CAN did not mean or imply that there had been an entitlement to a real dividend (see paragraph 453(iii) above).

I noted in paragraph 411 above that the SCP CAN was modelled on the CANs issued by Merrill Lynch in connection with the Broadgate transaction. I am not trying any claim or issue concerning that transaction, which related to German shares and German tax and was not investigated in depth at the Main Trial. I cannot make any firm finding as to this, therefore, but it seems plausible that the language may have been chosen by Merrill Lynch to ensure that it should not be taken to suggest dividend income earned on a shareholding rather than a more derivative type of income indirectly reflecting or relating to dividends that had been declared.

An Old Park Lane CAN contained no narrative statement as to what it was reporting. It was entitled “INCOME ADVICE”, above the name and address of a client as addressee, and did not refer to or give information about any account of the client’s at Old Park Lane. It thus took the form of a report of income, rather than that of a credit advice reporting the crediting of a payment to an account. By way of content, then, it tabulated details of a Danish share security, the “Ex-dividend Date”, “Record Date” and “Payment Date” for a “Dividend” declared on that security, and “Payment details” identifying a “Dividend Per Share”, a “No. of shares”, and “Gross”, “Tax” and “Net” amounts.

Read sensibly, as a report of income by a financial services firm to its client, in my judgment an Old Park Lane CAN thus conveyed that the client had received payment on the stated “Payment Date” of the “Net” amount shown, and how that was calculated from the referenced dividend. The CAN did not say anything about the nature of or basis for any entitlement the client may have had to such an income payment; and the receipt of such a payment does not imply that the recipient had a shareholding (see paragraphs 453 and 454 above). In particular, in the context of the referenced Danish share security, it was a given that the only party that would ever deduct anything from a ‘dividend’ payment made by it would be the Danish company itself, when paying VPS. In a payment credit advice remote from the company, and given the matters referred to in paragraph 453(i) to 453(iv) above, those “Payment details” in an Old Park Lane CAN did not, in my judgment, purport to confirm anything more than how the reported income had been calculated.

A West Point CAN was entitled “DIVIDEND CREDIT ADVICE”, above a date and a “Tran Ref” (presumably ‘transaction reference’, not explained further), all above the name and address of the client as addressee. Like the Old Park Lane form of CAN, a West Point CAN contained no narrative sentence identifying what it was reporting. It likewise did not refer to or give any detail of any account of the client’s at West Point; however, the document title identified that it was advising the client that West Point had credited a ‘dividend’ payment to the client, implying (I think) the existence of such an account. The West Point CAN content was materially the same as, albeit formatted marginally differently from, that of an Old Park CAN. As before, the receipt of a ‘dividend’ credit does not mean or imply the existence of any shareholding, and in my view a West Point CAN therefore conveyed materially the same information and message as was conveyed by an Old Park CAN, plus (only) the (implicit) statement that the relevant payment had been credited to an account of the client’s at West Point.

A Telesto CAN was entitled simply “CREDIT ADVICE”, above a date and “ID” number (not explained further), all above the name and address of the client as addressee. By way of content, it identified a “Security” (always a Danish share issue, identified by name and ISIN), an “Ex Date”, “Record Date” and “Pay Date” relating to that security, and then data for “Dividend Per Share”, “No of Shares”, “Gross Dividend”, “Withholding tax deducted” and “Net Dividend”, without any sub-heading. In my judgment, the purport of a Telesto CAN was the same as that of an Old Park CAN, for the same reasons, plus (as with the West Point form of CAN) an implicit statement that the payment being reported had been credited to an account of the client’s at Telesto.

Indigo and Lindisfarne CANs were materially identical to Old Park Lane CANs, except that an Indigo CAN was entitled “CREDIT ADVICE – DIVIDEND” and a Lindisfarne CAN was entitled “DIVIDEND CREDIT ADVICE”, rather than the Old Park Lane CAN’s “INCOME ADVICE”. Again, therefore, no statement was made or implied that shares were held; and in my judgment Indigo and Lindisfarne CANs conveyed the same information and message as did Old Park Lane CANs, plus (implicitly) the information that the reported payment credit was to an account of the client’s at Indigo or Lindisfarne, respectively.

A Salgado CAN was entitled “CREDIT ADVICE”, and set out information relating to a security and dividend from which, it is evident, “Due dividend payment details” of a “Due payment amount” and “Due payment date” had been derived. That purported to do no more than explain the calculation of the amount of the credit being reported, and did not make or imply any statement about shares being held for the client. The client’s name was entered against “Name of beneficial owner”, which (if anything) reinforces the view that the CAN could not be read as purporting to record any shareholding (cf paragraph 454 above).

The CANs issued by NCB in the Maple Point Model were materially different in form and content. They purported to record “Dividend income” in respect of “Holdings as at” a stated date (always in fact the dividend declaration date) of a stated number of Danish shares. In my view, that could only reasonably be read as confirmation that the client held the shares referred to, on the dividend declaration date, and was being credited with a ‘dividend’ income payment, calculated net of tax deducted at source, on that holding. The fact that similar content, as to a ‘dividend’ payment, might not by itself imply anything about shareholding does not detract from the clear sense of the express “Holdings as at” statement that an NCB CAN made.

An NCB CAN stated on its face that it was “Not a tax certificate”. That meant NCB made no statement, and the CAN was not to be relied on, as to whether tax had been deducted at source, or otherwise as to the tax consequences of the “Actual payment” to the client of the amount stated. In my view, that did not negative or qualify the “Holdings as at” statement, which was not a statement concerning the tax status or consequences of the reported holding. Nor did anything in the small print on the second page of an NCB CAN serve to negative or qualify the “Holdings as at” statement (so long as it is not taken to say anything about tax status or treatment).

It is not an answer, as was submitted on behalf of the DWF Ds in respect of the objective purport of an NCB CAN, that NCB used transaction recording and reporting software used by a number of German banks so that its CANs were what that software package generated from the inputs it was given on Maple Point Model trades. The evidence at trial disclosed no reason to suppose that whatever inputs the software required were not drawn accurately from the Maple Point trades as executed. Equally, however, on the evidence, I cannot say whether the required inputs would have ‘told’ the software that there were no shares, yet it generated the “Holdings as at” statement nonetheless, or whether the software in effect wrongly assumed that any share trade settlement will have been DVP, i.e. will have involved the transfer of a shareholding. Either way, the Maple Point Model, it seems, exposed a weakness in the software, as the plain fact is that it generated CANs purporting to record shareholdings where there had been none.

That brings me to the point arising from SKAT’s Further Information. Asked to clarify what SKAT meant by alleging that CANs purported to record “shares … held”, the Response was “that the shares specified in the [CAN] (i) were owned (as a matter of Danish tax law) on and before the Ex-Date …; and (ii) by the time the [CAN] was produced constituted a settled positive balance of shares …”. In my view, there is no warrant for reading anything like that into the NCB CANs, or any of the CANs for that matter, none of them having stated anything like it expressly. Furthermore, in the case of an NCB CAN, the claim that it made a statement about Danish tax law ownership is directly negatived by the disclaimer that the CAN was “Not a tax certificate”.

Secondly, SKAT alleged that each CAN purported to record that a specific payment representing a dividend had been received for the account of the client to whom the CAN was issued (paragraph 456(ii) above). I do not agree. Each CAN reported to the client that the custodian had credited it with an amount reflecting or based on the dividend identified, or (in the case of an Old Park CAN) that the client had received an income payment in such an amount. None stated that the custodian had “received for your account …”, or similar, or had to be based on a receipt by the custodian so that some such statement might be implied.

Thirdly, then, by the final part of its preparatory plea concerning the purport of the CANs themselves, SKAT alleged that they purported to record that “such payment of dividend” had been received by the client “net of a specific amount of tax that had been withheld by the … Danish company” (paragraph 456(iii) above). The subject matter (“such payment …”) is the payment received by the custodian for the client’s account that CANs reported, according to SKAT. But as I have just stated, in my judgment CANs did not make such a report.

I therefore do not accept any part of SKAT’s preparatory plea at paragraph 17(c) of the Particulars of Claim, quoted in paragraph 456 above, as clarified by its Further Information, concerning the purport of CANs, as issued to custodians’ clients.