Before : |
Sir Michael Birt, Commissioner |
Between |
Triton Administration (Jersey) Limited |
Applicant |
And |
Office of the Comptroller of Revenue |
Respondent |
Advocate M. W. Cook for the Applicant.
Advocate G. G. P. White and Advocate S. Meiklejohn for the Respondent.
ex tempore judgment
the COMMISSIONER:
1. Triton seeks judicial review of the decision of the Jersey Competent Authority ("the JCA") to issue two notices. They were issued following a request from the Swedish Tax Authority ("the STA") who are considering the tax affairs of Mr Prahl. The notices cover both the calendar years 2017 and 2018 but I have been informed this morning that 2017 is no longer pursued because of time limits in Sweden and accordingly the information sought now under the notices is merely that in relation to the calendar year 2018.
2. The test for requiring tax information under the 2008 Regulations, as applied by the 2014 Regulations, is well established. A notice can only be issued in respect of 'tax information' and that is defined as information that is foreseeably relevant to the administration and enforcement of the domestic laws of the requesting state concerning tax; the requesting state here of course being Sweden.
3. In the case of Imperium Trustees (Jersey) Limited v JCA [2023] JCA 057 the Court of Appeal explained what is meant by foreseeably relevant at paragraphs 44 to 51 of its judgment and I have borne those paragraphs and indeed the general guidance as to what is meant by foreseeably relevant in mind. In effect information is foreseeably relevant if there is a reasonable possibility that the requested information will be relevant to the tax affairs of the taxpayer in point. The Court of Appeal also made clear at paragraph 40 that the Court must decide for itself whether the information required by the notice is tax information. It is not a question of simply assessing the reasonableness of the JCA's view that it is tax information. That does require therefore the JCA to put forward sufficient information so that the Court can itself reach a conclusion on this issue. However, the Court of Appeal also made clear at paragraph 51 that it is not for this Court to decide matters of tax law of the requesting state or factual matters which are in reasonable dispute. The test is simply foreseeable relevance. It is up to the authorities and courts of the requesting state to determine any dispute about the application of that country's tax laws in the particular case.
4. The test established by the Court of Appeal in Imperium, which broadly endorsed earlier cases in this jurisdiction, is now reflected in statute in Regulation 1A(2) and (3), which were introduced by way of amendment of the 2008 Regulations and I have applied those provisions in coming to my decision, although as I say they add nothing to what the previous position was.
5. I turn therefore to the grounds relied upon by Triton. Ground 1 is that the notices are ultra vires because the information requested is not tax information. The principal aspect relied upon is that the liability of Mr Prahl in Sweden depends upon him being resident for tax purposes in Sweden in the relevant years, now 2018. This was put in issue in the previous proceedings and, says Triton, there has still been no definitive decision by the STA that Mr Prahl was resident in 2018. According to the affidavit of Mr Per Holstad, a Swedish accountant, the STA would normally determine residence first and then consider any tax liability. However, this is disputed by the STA which says that the two aspects are usually considered together. It is not for this Court to resolve who is correct on this issue and therefore I proceed on the basis that it may not necessary to determine residence first.
6. Mr Prahl disputes strongly that he was tax resident in Sweden during 2018 or indeed 2017. However, despite what he has put to them, the STA is still of the view that Mr Prahl was tax resident. A brief summary of the reasons put forward by the STA for holding this view is contained in Mr Summersgill's third affidavit. Those grounds are disputed by Mr Prahl and therefore not accepted by Triton. However, this is a classic example of what the Court of Appeal envisaged at paragraph 51 of its judgment in Imperium. Unless it is plain and self-evident that the STA is wrong about Mr Prahl being tax resident in Sweden during the relevant years, the information sought will still be foreseeably relevant and therefore tax information. That is because there is a reasonable possibility in those circumstances that Mr Prahl will be found ultimately to be tax resident in Sweden and therefore the information will be relevant.
7. Advocate Cook submits that the JCA has not done what the Court in the previous proceedings said it should have, namely go back to the STA and ask whether, in the light of the points made by Mr Prahl as to why he was not resident, the STA still considered him to be resident. Advocate Cook pointed out that the matters relied upon by the STA, as summarized in Mr Summersgill's third affidavit, were exactly the same matters as the STA had relied upon in the previous case.
8. However, the circumstances are very different. In the earlier case the STA had said in response to Mr Prahl's written letter pointing out why he considered he was not resident that it would reconsider the question of his tax residence, but there was no evidence as to what this reconsideration had concluded. The JCA never went back to the STA and ask whether it remained of the view that Mr Prahl was tax resident. There was therefore no satisfactory evidence before the court at that point that the STA was still of the reasonable view that Mr Prahl was tax resident. But in the present case the evidence shows that, many months later, the STA is still of the view that Mr Prahl was tax resident in 2018, despite having been made aware of the arguments of Mr Prahl as to why he was not resident.
9. Accordingly, on the evidence before me in the affidavits, I cannot possibly say that the contention of the STA that Mr Prahl was tax resident in Sweden in the relevant years (including 2018) is plainly and self-evidently erroneous. This will be a matter for the STA and ultimately the Swedish courts to determine following any assessment by the STA and any subsequent appeal in Sweden by Mr Prahl.
10. The second aspect of Triton's submissions on this ground relates to the UK/Sweden double taxation agreement. This provides for the avoidance of double taxation as between Sweden and the UK. Mr Prahl contends that pursuant to that agreement, even if he is otherwise resident in Sweden, he would be taxed in the UK only under the agreement. He has applied to HMRC for a decision that, for the purposes of the double taxation agreement, he was resident in the UK and that the UK has exclusive taxing rights in relation to Mr Prahl's non-Swedish income and gains, which would include that arising in Jersey. In the circumstances, says Triton, the information requested in the notices cannot be foreseeably relevant, as there would be no taxation liability in Sweden because of the effect of the UK/Sweden double taxation agreement.
11. I reject this submission. On the evidence before me, no decision has been reached by HMRC, which has apparently been in touch with the STA, on Mr Prahl's application. In the circumstances I cannot possibly find that there is no reasonable possibility, because of the UK/Sweden double taxation agreement, that Mr Prahl will be subject to Swedish tax on his Jersey income or gains.
12. Finally under this Ground 1, namely that the notices were ultra vires, Triton submits that some of the information sought cannot be relevant to Mr Prahl's tax liability in Sweden. They point for example to the financial statements of Addison which have been required and the information sought about Bolero concerning the sale of its assets and certain other matters.
13. The JCA has explained in paragraphs 33 and 34 of Mr Summersgill's second affidavit why it considers that the requested information is foreseeably relevant. Although perhaps somewhat short on details, I am satisfied from what is asserted that all the information requested is foreseeably relevant. I certainly cannot conclude that this is plainly not the case.
14. Ground 2 alleges that the decision to issue the notices was irrational. First, it is said that the JCA had no regard to the position in relation to the UK/Sweden double taxation agreement which it should have done. Given my decision in relation to Ground 1, namely that the position under the UK/Sweden double taxation agreement does not mean that the information sought is not tax information, I do not consider that the JCA's decision can be categorised as unreasonable.
15. Secondly, it is contended that the JCA failed to have regard to the fact that Mr Prahl's tax residence has not yet been determined. But that submission ignores the fact that the test is not whether Mr Prahl was tax resident in 2018; the test is simply foreseeable relevance, namely whether there is a reasonable possibility that he was tax resident for the relevant year.
16. For the reason given in relation to Ground 1, I find that there is such a reasonable possibility and accordingly the information sought is foreseeably relevant and amounts to tax information. In the circumstances where this Court is satisfied that this is tax information, the JCA's decision to issue the notices requiring it pursuant to the Convention cannot be categorised as unreasonable or irrational.
17. Ground 3 alleges that the JCA has acted in breach of Article 8 of the European Convention on Human Rights in that it has acted in a disproportionate manner. It is said that in circumstances where the STA has not meaningfully engaged with the consequences of the UK/Sweden double taxation agreement, it cannot be said that the demand contained in the notices is the least intrusive method available to address Mr Prahl's tax liability. I reject this submission. The Convention on Mutual Assistance specifically envisages that assistance should be given by one jurisdiction to another in relation to tax information, i.e. information that is foreseeable relevant. Having held that the information requested in this case is tax information I see nothing disproportionate or in breach of Article 8 of the ECHR in the JCA fulfilling its obligations under the Convention and giving assistance to the STA.
18. Accordingly I dismiss all the non-Article 6 grounds for judicial review in this case.
Authorities