By Kirstin Ridley
LONDON (Reuters) – A lawyer for hedge fund manager Sanjay Shah’s Solo Capital called for Britain’s top judges on Wednesday to block a 1.44 billion pound ($1.8 billion) Danish lawsuit over “cum-ex” schemes, which flourished after the 2008 global credit crisis.
Kieron Beal, a lawyer for Shah and his associates, told the British Supreme Court that Denmark’s Customs and Tax Authority, Skatteforvaltningen (SKAT), which is bringing the case, was trying to fill a tax gap created by its own mistake.
“It is the extra territorial application of the Danish tax regime in this jurisdiction,” Beal said on the first of the two-day hearing.
The case turns in part on whether judges decide SKAT is trying to use English courts to enforce its tax laws, which is not allowed under a so-called “revenue rule”.
SKAT says its claim is not over tax due, but that it is the victim of a civil fraud. It alleges Solo Capital and others used a scheme to dupe it into refunding purported taxes on dividends that were never been paid between 2012 and 2015.
The agency alleges Solo Capital and others, who applied to the Supreme Court to overturn a Court of Appeal decision allowing the case to proceed, owned no shares in Danish companies and that their applications for “dividend tax refunds” were “a lie from start to finish”, court filings show.
Dubai-based Shah, who is British, denies any wrongdoing.
In so-called cum-ex schemes, shares were traded rapidly around banks, investors and hedge funds to blur stock ownership, allow multiple parties to claim tax rebates and exploit the tax codes of countries such as Denmark, Germany and Belgium.
They have since triggered bank raids, arrests and prosecutions. Denmark has charged eight British and U.S. citizens over the scheme, which it says has cost it more than 12.7 billion Danish crowns ($1.86 billion).
A second Briton, charged over the case, was extradited from Britain to Denmark on Tuesday.
Shah, who has also been charged by Danish prosecutors, is being extradited from the United Arab Emirates, a UAE official said in April.
($1 = 6.8399 Danish crowns)
($1 = 0.7866 pounds)
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