By Eniola Amadu
Denmark’s tax authority has lost a £1.4bn fraud case in the High Court in London, one of the highest-value civil cases ever heard in the United Kingdom.
The authority, Skatterforvaltningen (Skat), alleged that vast sums had been wrongfully claimed in dividend tax refunds between 2012 and 2015 through so-called “cum-ex” schemes.
The main named defendant was Solo Capital Partners, a defunct hedge fund run by trader Sanjay Shah, who was jailed in Denmark last year following a separate criminal trial.
Mr Justice Andrew Baker, delivering his ruling, said the Danish authority had not been deceived into making the payments.
Instead, he found that Skat’s own systems were inadequate.
“Greed can be a powerful motive, and I consider there was substantial greed here,” he said. “However, the evidence at trial did not persuade me to accept Skat’s claim, and I do not make the findings it sought.”
The court examined 4,170 dividend refund claims filed over a three-year period, none of which were valid under Danish law.
The judgment stated that all claims could have been rejected had effective checks been in place.
Mr Justice Baker concluded that Skat’s “controls for assessing and paying dividend tax refund claims were so flimsy as to be almost non-existent.”
He further ruled that Skat had “failed to establish any of the claims pursued at trial where liability was disputed.”
In response, the Danish government issued a statement expressing strong disagreement with the ruling.
It said the tax authority “strongly disagrees with the premises of the judgment and is now seeking to appeal it.”
Cum-ex schemes, which have been used across Europe, involve exploiting loopholes in dividend taxation systems.
They typically work by trading shares around the dividend record date, creating uncertainty about the true owner of the shares. This enables multiple parties to claim refunds of withholding tax, even though the tax was only paid once.
The practice is believed to have cost European governments billions of pounds over the past two decades, with Germany and Denmark among the worst affected.
