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

The Solo Model trading structure, as SCP’s devised modus operandi, required SCP to have access to tax favoured entities to be the equity buyers under the Model. USPFs (and later LabCos) were identified, by type, as candidates to be those tools of SCP’s trade, and so were recruited. That is why, for example, the first Solo Model recruitment communication (for possible Belgian trading) was Mr Shah’s email to Mr Markowitz on 9 April 2012 wondering if Mr Markowitz had a “pension fund in the US that can be used for trading equities and derivatives”. In the ensuing email exchange, Mr Shah did dress the proposal up as (i) “similar to the Broadgate strategy (equities and futures)”, a half-truth given the key difference not mentioned that there would be no shares, and (ii) a “platform which should suit your risk profile which we have been developing”; but I consider the initial language used telling.

Once recruited, the USPFs (and later the LabCos) were directed by SCP to appoint and use the Tax Agents selected by SCP for the business. The Solo Model was not available to ‘investors’ who might want to take care of their own Danish tax affairs, filing their own tax refund claims. The Tax Agents having then been appointed by the USPFs and LabCos, as they had to be so as to have evidence of their authority to submit tax reclaims on their behalf, they (the Agents) knew what the job required and could largely get on with it. But it was clear on the evidence at trial that to the extent that further direction was ever required or sought, it was given to the Agents by, and sought by them from, SCP (GSS). The Belgian tax authority enquiry is a good example (see paragraph 158 of the main body of this judgment); there were also plenty of more routine examples, showing that the Tax Agents looked to SCP for direction, and knew that SCP expected them to do so, over when to submit reclaims, how to batch them, and what to do with the proceeds.

In my judgment, without contradicting the legal fact that the contractual agency was always between the Tax Agent and the USPF or LabCo, in the context of attributing responsibility for the tort of deceit, the correct conclusion is that SCP was at all times the true principal behind, and directing, the Tax Agents’ activity in relation to the Solo Model. It is a step too far, however, to say that Mr Shah personally occupied (or also occupied) that role. He was SCP’s directing mind and will for the tax reclaim business; and he was the most important individual at SCP for it. But there were very significant others, most importantly (and without trying to be exhaustive) Mr Horn and Rajen Shah until they left Solo in 2013, Priyan Shah and Mr O’Callaghan thereafter, and Mr Barac, and to a more limited extent but still important, Mr Bains and Mr Dhorajiwala. It would not be correct for present purposes, in my view, to ignore SCP’s separate legal identity and say that Mr Shah personally rather than SCP was the Tax Agents’ true principal.

I therefore would have rejected SKAT’s claim that Mr Shah had primary liability on the basis of his being the true principal of the representors (the Tax Agents), from the perspective of the tort of deceit.