Tax notice review after court finds Comptroller "may have acted unlawfully"

Tuesday 21 February 2023

A Jersey investment company has won permission to review parts of a disclosure notice into the tax affairs of a Swedish resident holding shares in a local company after challenging the Comptroller of Revenue in the Royal Court.

Deputy Bailiff, Robert MacRae ruled that the Comptroller of Revenue "may have acted unlawfully" when issuing a disclosure notice under Jersey’s tax information exchange agreement with Sweden.

Triton Administration (Jersey) Ltd was seeking leave for a review of a disclosure notice issued on behalf of the Swedish tax authorities conducting inquiries into the tax affairs of a taxpayer employed by the Triton Group in Sweden from 2009 to 2020.

The individual, a Mr Leijonqvist, was a shareholder in a Jersey company, Three Ampford Ltd, which he had declared in his tax returns although he told the Swedish authorities that, while he was aware of carried interest arising from the company – a share of profits – he did not know the amounts or have the documents to provide that information.

Pictured: Deputy Bailiff, Robert MacRae was presiding.

Following an approach by the Swedish authorities, seeking information relating to the 2018 tax year, a disclosure notice was issued but it was subsequently withdrawn after lawyers acting for Triton raised issues relating to the detail of the request.

It was subsequently re-issued in revised format, leading to a hearing before the Deputy Bailiff at which Triton sought permission to have the issuing of the notice judicially reviewed.

Representing Triton, Advocate Matthew Cook argued it was unlawful because it related to a tax year which was closed and could not now be reopened; because it was too broad and sought information which did not relate to the taxpayer; because it was not sufficiently clearly expressed; and because it did not take account of information already available in Sweden.

Giving judgment, the Deputy Bailiff noted that an affidavit supplied on behalf of the Comptroller of Revenue just before the hearing satisfied the applicant and the court that "most of the grounds upon which judicial review were sought did not have a realistic prospect of success". It would have been preferable, he said, for this to have been filed further in advance of the hearing although he noted that there was no legal requirement for the filing of evidence in such a case.

The Deputy Bailiff dismissed three of the four grounds for judicial review but in relation to the detail of the information being sought by the Swedish authorities, he continued: "There are merits in both competing arguments but at this stage I merely need to be satisfied that the applicant has a realistic prospect of success on this ground.

"I am so satisfied and accordingly grant leave to the applicant for judicial review of the decision to issue the notice to the extent that the respondent may have acted unlawfully in seeking information... which may not have been, or be foreseeably relevant to the Swedish tax authority’s investigation into the taxpayer, as alleged in ground two."