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

SKAT addressed at length on the evidence whether Lindisfarne knew at the time that its CANs would be and were being sent to SKAT, or only (as Lindisfarne said) that they would be and were being sent to the Tax Agents and might well be sent to SKAT. In my judgment, that served more to obscure than to help resolve what would have been the real question. What would have mattered is Lindisfarne’s purpose in issuing CANs to the equity buyers, following the share-less settlement of their purchase trades, so as to give them a separate and specific documentary record relating to one (only) of the cash movements generated by that settlement. What Lindisfarne knew of how its CANs would be or were being used might shed some light on that, potentially justifying or supporting a finding by inference as to purpose. But it would be unrealistic to think it might make a difference to anything if Lindisfarne only believed that its CANs might well be going to SKAT, rather than knowing for sure that they were.

Lindisfarne would expect to maintain, and provide to its clients, full and accurate account records. It was under regulatory obligations to do so. It had no such obligation as regards CANs. Mr Horn explained to Lindisfarne at the outset of its involvement that the trading model was a structured equity purchase transaction in which a back-to-back stock lending chain, from the buyer to a stock loan intermediary to the seller, was used to settle the purchase, so that no shares needed to be acquired and the trade was self-funding, with no profit or loss other than possible tax reclaim profits for the buyer, and that Lindisfarne would be expected to issue CANs for use by tax reclaim agents.

On that explanation, and since the clients would get full account statements anyway, the only conceivable reason why a CAN might be wanted was so it could be presented to a tax authority, or used in some other way by the tax reclaim agent as the basis for submitting a tax reclaim. I have no doubt at all that Lindisfarne issued CANs as it did so that what it stated in those CANs could be passed on to the relevant tax authority, i.e. SKAT. That was the evident sole purpose of having CANs; that was Lindisfarne’s purpose in issuing them.