Case No. RS20D03594

39.Turning to the issue of the enquiry by the tax authority of Country X, the investigation has been handled on behalf of the Husband by a director of an accountancy firm, Mr G. On 16 October 2020, he said that the claim by the tax authority was for c. $120 million plus penalties and interest that would take the total liability up to c. $180 million. A further request was made to Mr G, leading to a second letter on 30 June 2021. At that point, Mr G said that the primary tax liability was put at c. $50million with penalties of c. $15 million and interest of c. $10 million, making a total of c. $75 million of which the Husband would be responsible for 75% or c. $55 million, with CR taking on the remainder of the liability. On the same day, he wrote a separate letter in which he confirmed that the tax, if the Husband had to remove all the assets from the trusts by way of dividend, after he had been repaid his loans, would be c. $30 million. This was slightly revised, on 14 December 2021, to c. $40 million plus a further sum of c. $400,000. In relation to the tax enquiry, the figures were still broadly as above but the tax authority had said, informally and on a without prejudice basis, that it would take c. $40 million to compromise the claim. 40.The Wife then instructed Mr H to respond. On 25 February 2022, he wrote to say that he considered the likely tax due, including interest and penalties, would be c. $20 million. It was accepted that Mr H did not have all the relevant documents that the firm would need to see to form a firm view of the liabilities but a number of points were made that, in the view of Mr H, would reduce the overall liability. These included matters such as deductibility of ex-gratia payments; a reduction of 50% on the basis that the tax authority accepted that the Husband had “a reasonably arguable position”; capital losses available if the Tax authority was successful on various tax rules and tax deduction for income earned in the year that interest had to be paid to the Tax authority. In relation to the issue of dividend tax, Mr H considered it highly unlikely it would ever all be paid and that, if payments had to be made, it was likely they would be many years in the future. He made some further points about the Husband changing his tax residency and making payments via the children that I consider to be speculative and not a proper basis on which to reduce the claimed tax liability.41.Mr G responded to Mr H in an undated letter. Initially, I was asked not to read the letter but I was clear that I should do so, particularly given that I had read Mr H’s letter. Mr G’s basic point is that it is inappropriate to speculate on settlement but I find that hard to accept, particularly given the without prejudice offer made by the tax authority. I simply cannot see how the liability can be higher than that, despite Mr G’s best efforts. If the Husband’s team genuinely thought that they could not succeed on each point, the Husband would have accepted the without prejudice offer by now. Mr G does, however, make some points that may well be good ones, such as that the “reasonably arguable rule” merely relieves the tax payer of penalties and is not a justification for simply reducing the liability by half. He says that there is some merit in one of the other rules but it is not available if you fail to show a reasonably arguable position. Another rule may have merit but, to date, it has not been fully and critically examined. 42.The Husband has exercised his right to claim privilege in relation to advice that he has received in Country X. This is his absolute right. He cannot be criticised for so doing. Moreover, Miss Bangay QC, on his behalf, made the point that he could not do so as, if he did, the tax authority would be entitled to argue that he had waived privilege to enable the authority to see the advice. I have come across similar situations in litigation in this country. Miss Bangay then asked for a meeting between Mr G and Mr H to see if the differences could be narrowed. Miss Stone QC, on behalf of the Wife, opposed this on the basis that there would not be a level playing field as Mr H had not been given access to all the documents. I did not see that I could order a meeting in such circumstances. I made the point that this should have been dealt with by expert evidence from a Single Joint Expert. I will just have to do the best I can in what is an uncertain position in any event. I will obviously return to this in due course.