High Court decides that Danish Tax Authority failed to prove inducement by misrepresentation (SKAT v Solo Capital Partners)
Tax analysis: The High Court dismissed the fraud claims brought by the Danish Tax Authority, Skatteforvaltningen (SKAT) arising out of the cum-ex trading scandal. SKAT alleged that it had been wrongfully induced to pay claims for repayment of Danish withholding tax by misrepresentations made in documents submitted to it. However, the court held that while the refund claims were invalid, SKAT had failed to show that it had been induced to make the payments in reliance on false representations. The documents submitted to SKAT did not contain the majority of the representations alleged by SKAT and the process by which the claims were approved was so mechanistic and unthinking that no regard was had to the alleged misrepresentations. While the court found that many of the defendants were dishonest at the time and were untrustworthy witnesses at trial, this was not sufficient to prove the particular case as pleaded by SKAT. The judgment confirms the importance of factual evidence when establishing claims for misrepresentation Written by Edward Reed (senior advisor), Alice Mason (senior associate) and Victoria Braid (associate) at Macfarlanes LLP.