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

Fecha: 02-Oct-2025

F.1.7 The Alleged Tax Representation

F.1.7 The Alleged Tax Representation:

that the Danish company had withheld the tax described in the CAN so that the payment received by the Tax Agent’s named client in respect of the referenced dividend was paid net of the tax withheld

509.

Mr Graham KC shortened that, in his oral argument as to the essence of the representations alleged by SKAT, to a case that SKAT was told that “the Danish company had withheld the tax identified in the CAN from the dividend paid to the named client”. There can be no objection to that paraphrase of the pleaded case, as long as care is taken to keep in mind what must be meant by the notion of the Danish company withholding tax from a payment made to the Tax Agent’s client.

510.

Mr Graham KC’s paraphrase was close to the primary pleading, at paragraph 19(c) of the Particulars of Claim: “The Danish company had withheld the tax described in the [CAN] from that payment”. SKAT was asked to make clear what it meant by that, and in particular whether the representation alleged was to the effect that (i) the Danish company had withheld dividend tax when paying VPS, (ii) the Danish company had withheld dividend tax from a payment made directly to the Tax Agent’s client, or (iii) something else. In response, SKAT said that it alleged a representation “to the effect that the Danish company which had declared the dividend had withheld the amount of tax identified in the [CAN] so that the payment received by the [Tax Agent’s client] was paid net of the tax withheld” (my emphasis).

511.

That was an important clarification. The basic pleading might have been taken to allege a statement that the Danish company had deducted tax from a dividend payment made by it to the Tax Agent’s client. The words I have emphasised made clear that SKAT was not alleging a statement to that effect. Rather, the statement alleged was to the effect that the Danish company had withheld tax with the result that the payment received by the Tax Agent’s named client was net of that withheld tax. In my view, it is only meaningful to speak of a payment received remotely from the Danish company (such as by one of the Tax Agents’ clients here) as having been received net of tax that had been withheld by the Danish company, if the payment was at the end of some kind of payment chain starting with the Danish company.

512.

I am therefore content to adopt Mr Graham KC’s formulation of the essence of the tax representation for the purpose of considering the claim, but always bearing in mind that clarification as to what it means. The tax representation, as alleged, thus depended on the notion, pleaded by SKAT in its preparatory plea about CANs, that a CAN purported to record the receipt by a custodian of a payment for the account of the client. The tax representation plea was that, more particularly, a CAN reported the receipt by the custodian, for the client’s account, of a payment net of tax at the end of a payment chain originating with the Danish company.

513.

I did not accept the claim that a CAN stated or implied the receipt of a payment for the client’s account, or therefore the more particular claim, similar perhaps to the allegation that the tax representation was made, that a CAN reported a receipt by the custodian net of tax withheld by the company (see paragraphs 495 and 496 above). In my view, that is fatal to the claim that the tax representation was made.

514.

The argument for the tax representation was put by SKAT as follows (again removing reference to language in Form 06.008 that does not appear in Form 06.003 (see paragraph 437 above)):

(i)

“86.1 … the Tax Refund Forms referred to a “[C]laim for [R]elief from Danish [D]ividend [T]ax” on behalf of the WHT Client that sought a “refund” of a specific amount of “Danish dividend tax” … .”

That is true, but it did no more than identify the claim being made. It made no relevant representation to SKAT.

(ii)

“86.2 … Form [06.003] also emphasised that it was “obligatory” to enclose a “dividend advice”. All of the WHT Applications were in fact supported by DCAs from Custodians. The purpose of such DCA was to evidence the WHT Client’s receipt of a dividend from which tax had been withheld. In this context:

… the DCAs issued by NCB expressly stated an amount of “Dividend income”, an amount of “Overseas tax deducted at source 27%” on the “dividend subject to withholding tax” and then an “Actual payment” amount being the difference in amount between the two.

The Telesto and [West Point] DCAs referred to a specific amount of “Withholding Tax Deducted” as well as “Gross dividend” and “Net dividend” amounts.

The Salgado DCAs referred to a “Withholding rate” of “27%” as well as a specific “Tax amount” and “Gross dividend” and “Net dividend” amounts.

All other DCAs referred to a specific amount of “Tax” as well as specific amounts of “Gross dividend” and “Net dividend” (the difference between the two being the amount of “Tax”).

In each case, it was the figure for “tax” or “tax deducted” / “withholding tax deducted” in the DCA that was the amount of “Danish dividend tax” of which a refund was sought in the Tax Refund Form.”

The purpose of a CAN was not to evidence the client’s receipt of a dividend from which tax had been withheld, in the sense asserted by SKAT (paragraphs 511 and 512 above). A CAN might or might not, by its content, purport to evidence such a receipt, depending on what exactly it said, but its purpose was simply to advise the client of a dividend-related credit posted to its account by the custodian, i.e. a payment to the client by the custodian. Subject again to the content of any particular CAN, such a credit might or might not have been or resulted from anything received by the custodian indirectly from the company, via a custody chain: see generally paragraphs 453, 454, 495 and 496 above.

In those paragraphs, I concluded that the CANs here, by their content, did not purport to evidence a receipt by the custodian out of which it might be possible to construct something like the tax representation. The question therefore becomes whether by submitting it in support of a dividend tax refund claim (the Form having required a “dividend advice(s)” to be enclosed, if Form 06.003 was used), the Tax Agent was telling SKAT something not conveyed by the CAN itself. In my judgment, that reads too much into that conduct. There is no reason why SKAT, acting reasonably, should take the CAN to say or mean more than it would say or mean, as issued to the custodian’s client, merely because it was submitted as part of a dividend tax refund claim.

(iii)

“86.3 The cover letters sent by Goal referred to the “tax reclaim form” together with evidence of “payment and tax deduction” “on the above client’s securities”. The cover letters sent by Acupay stated that they attached a reclaim application “to obtain a full refund of Danish dividend tax”. The cover letters sent by both Koi and Syntax referred to an application “for a complete refund of Danish Dividend Tax that was previously withheld in relation to their investments” (emphasis added).”

The language used by Acupay and relied on here by SKAT added nothing to the bare fact that a tax refund claim was being made. However, I agree with SKAT that Goal’s, Koi’s and Syntax’s language could be read as conveying that the claim related to tax that had been withheld from a payment received by the client, in the sense alleged by SKAT. I have concluded that the CANs in themselves made no such statement. However, they did not rule it out, and taking the cover letters into account, therefore, in my view the tax refund claims submitted by Goal, Syntax and Koi, considered as a whole, might have been considered to make the tax representation to SKAT.

(iv)

“86.4 In accordance with s65(1) WHT Act, Danish dividend tax is withheld by a Danish company from dividends declared by it on account – and in discharge – of its shareholders’ liability to tax in respect of such declared dividends.”

That is an accurate summary statement of the Danish dividend tax rule. It does not affect what was or was not said by CANs, given their respective contents, and therefore takes the argument for the tax representation no further either way.

(v)

“87. At the heart of each WHT Application submitted to SKAT – and each DCA – was therefore an express or implied representation in the form of the Tax Representation i.e. that the Danish company which declared the dividend had withheld the stated amount of “tax” described in the DCA in respect of the WHT Client’s entitlement to a dividend so that the dividend payment received by the WHT Client was net of tax.

88.

In other words, the WHT Applications – and the DCAs – represented, in substance, that tax had been withheld from the dividends paid to the WHT Clients.”

For the reasons I have given, above, when considering one by one the premises upon which SKAT put those conclusions, in my judgment they might be well-founded conclusions for tax reclaims submitted by Goal, Syntax and Koi, but only because of statements made by those Tax Agents in their cover letters, not because of the tax reclaim documents themselves, that is to say (so far as material) the Form plus the CAN submitted with it. Those conclusions are not well founded for tax reclaims submitted by Acupay, and would not be well founded for tax reclaims submitted by the other Tax Agents in the absence of the gratuitous comments they added, referred to in sub-paragraph (iii) above.

515.

My findings, therefore, considering the matter objectively as called for by the way SKAT put the case, are that:

(i)

the tax representation was not made to SKAT through the submission to SKAT, without more, of the Form and a CAN in any of the formats used here, in support of a tax refund claim;

(ii)

however, where the Tax Agent was Goal, Syntax or Koi, the tax reclaim documents read as a whole may have made the tax representation to SKAT, because of the description given by the Tax Agent in their cover letter of what the submitted evidence showed;

(iii)

therefore, in the case of the tax representation, where the Tax Agent was Goal, Syntax or Koi, the cover letters might make a difference to whether the representation was made.