Danish Tax Authorities Lose £1.444 Billion Lawsuit in London
LONDON, October 2 – Denmark’s tax authorities have faced a significant setback, losing a £1.444 billion ($1.95 billion) lawsuit against Sanjay Shah’s hedge funds in London. This comes about ten months after a Danish court handed down a 12-year prison sentence to a Briton for related fraud.
The Danish tax agency, Skatteforvaltningen (Skat), initiated the lawsuit in the London High Court in 2018, alleging that Shah and his Solo Capital hedge fund orchestrated the majority of the fraudulent claims.
However, Judge Andrew Baker ruled that the tax authorities were not misled concerning tax refund claims, noting that Shah and his associates were not engaged in the controversial “cum-ex” dividend trading practice between 2012 and 2015.
Criticism of Skat’s Oversight
In his judgment, Judge Baker criticized Skat’s oversight as “flimsy.” He stated, “The judgment found that Skat was not misled by misrepresentations in the tax refund claims.” He emphasized that the management processes concerning the valuation and payment of these claims were inadequate, verging on nonexistent.
The “cum-ex” scheme, which took off after the 2008 financial crisis, involved rapid trading of stocks aimed at exploiting tax systems in countries like Denmark, Germany, and Belgium. It typically involved groups of banks, investors, and hedge funds before and after dividends were paid.
Skat plans to appeal the ruling. “We strongly disagree with the ruling’s premise and are actively pursuing an appeal,” the Danish agency disclosed in a statement.
Skat has been relentless in pursuing Shah, even forcing his extradition from Dubai in 2023, alongside filing civil lawsuits in London and initiating criminal proceedings in Denmark.
Chris Waters, a lawyer representing Shah, expressed that the case should not have progressed this far. “Today’s ruling is an absolute victory for Sanjay Shah and the defendants. It’s also a considerable defeat for Skat, which fell short in every aspect of its claims.”
In December, Shah was convicted in Denmark for his involvement in a “cum-ex” transaction worth 9 billion Danish crowns ($1.4 billion).
