UK Trader Loses Case to Block $1.8 Billion Cum-Ex Tax Fraud Case in London

In a landmark ruling, the UK Supreme Court has allowed the Danish Tax Authority (SKAT) to pursue a $1.8 billion cum-ex tax fraud case against a British hedge fund trader and dozens of companies. The case is one of the largest and most complex of its kind, and it could have far-reaching implications for the global financial system.

Background

Cum-ex trading was a complex tax avoidance scheme that was widely used in Europe in the 2000s. The scheme allegedly involved exploiting loopholes in dividend tax laws to create artificial losses that could be used to claim fraudulent tax refunds. The Danish Tax Authority alleges that Sanjay Shah, a British hedge fund trader, and dozens of companies used cum-ex trading to extract £1.44 billion pounds ($1.8 billion) in fraudulent tax refunds from Denmark.

The Supreme Court’s Ruling

Shah had argued that the Danish Tax Authority did not have jurisdiction to pursue the case in English courts. However, the Supreme Court ruled that the case was admissible because it turned on allegations that Danish tax refunds had been extracted by fraudulent misrepresentation, orchestrated mainly through entities in England. The court found that the English courts had a “real and substantial connection” to the case.

Implications

The Supreme Court’s ruling is a major victory for the Danish Tax Authority and could have far-reaching implications for the global financial system. It could encourage other tax authorities to pursue similar cases against other financial institutions that have been involved in cum-ex trading. It could also lead to increased scrutiny of other complex tax avoidance schemes.