ο»Ώ Triton Administration (Jersy) Limited v Jersey Competent Authority (Royal Court : Hearing (Civil)) [2025] JRC 041 (11 February 2025)

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URL: https://www.bailii.org/je/cases/UR/2025/2025_041.html
Cite as: [2025] JRC 41, [2025] JRC 041

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Judicial review - reasons for dismissing the application

[2025] JRC 041

Royal Court

(Samedi)

11 February 2025

Before     :

Sir Michael Birt, Commissioner

 

Between

Triton Administration (Jersey) Limited

Applicant

And

Jersey Competent Authority

Respondent

Advocate M. W. Cook for the Applicant.

Advocate S. A. Meiklejohn and Advocate G. G. P. White for the Respondent.

judgment

THE CommiSSIONER:

1.        This judgment concerns an application by Triton Administration (Jersey) Limited ("Triton") for judicial review of the decision of the Jersey Competent Authority ("JCA") to issue two notices ("the Notices") under the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008 ("the 2008 Regulations") as applied by the Taxation (Implementation) (Convention on Mutual Administrative Assistance in Tax Matters) (Jersey) Regulations 2014 ("the 2014 Regulations") requiring certain documents and information to be produced by Triton.  Leave to apply for judicial review was granted on 14 March 2024.

2.        At the conclusion of the hearing on 10 December 2024, I dismissed the application for judicial review in relation to the grounds argued at the hearing and gave a short ex tempore judgment to that effect (Triton Administration (Jersey) Limited v Comptroller of Revenue [2024] JRC 282).  What follows constitutes the more detailed reasons which I indicated at the time that I would give in due course.

The applicable law

3.        I think it may be helpful to summarise the approach of the court to applications for judicial review of the Jersey Competent Authority before turning to the facts of the case. 

4.        Regulation 3(1) of the 2008 Regulations provides as follows:

"(1)     Where the competent authority for Jersey decides to respond to a request concerning a taxpayer, the competent authority for Jersey shall require a third party, being a person other than the taxpayer, to provide to the competent authority for Jersey all such tax information that the competent authority for Jersey requires for that purpose."

Regulation 3(1) also applies to requests under the Convention in accordance with Regulation 2 of the 2014 Regulations.

5.        Regulation 1A of the 2014 Regulations defines what is meant by -˜tax information' and is in the following terms:

"(1)     For the purposes of these Regulations "tax information" means information that is foreseeably relevant to the administration or enforcement of the domestic laws of the requesting Party concerning any tax described in Article 2(1)(a) of the Convention and listed in Annex A to the Convention as being a tax of the requesting Party, including information that is foreseeably relevant to -“

(a)     the determination or assessment of the liability of person(sic) to such taxes;

(b)     the determination, assessment and collection of such taxes;

(c)     the recovery and enforcement of such taxes;

(d)     the recovery and enforcement of tax claims; or

(e)     the investigation or prosecution of tax matters.

(2)     Information is foreseeably relevant to the administration or enforcement of the domestic laws of a requesting Party -“

(a)     if there are reasonable grounds to believe that there is sufficient connection between the person who is the subject of the request and the domestic laws of the requesting Party and that there is a reasonable possibility those laws may apply to the person; and

(b)     regardless of whether there are matters that are still to be determined by the requesting Party in respect of the person's liability to tax.

(3)     When determining whether information is foreseeably relevant regard must be had to the Model Tax Convention on Income and on Capital - Condensed Version (including the commentary), as updated from time to time, published by the Organisation for Economic Cooperation and Development.

(4)     Tax information may be -“

(a)     information within an individual's knowledge or belief; or

(b)     information recorded in a document or any other record in any format, that a person has in their possession, custody or control."

Paragraphs (2) and (3) were added to the previous definition of -˜tax information' by the Taxation (Exchange of Information -“ Amendment) (Jersey) Regulations 2023 which came into effect on 5 July 2023 ("the 2023 Amendment").

6.        The leading authority on the approach of the court to an application for judicial review of a decision of the JCA to issue a notice pursuant to the 2008 or 2014 Regulations is Imperium Trustees (Jersey) Limited v Jersey Competent Authority [2023] (1) JLR 229 ("Imperium"), a decision of the Court of Appeal.  I have carefully considered the whole of the judgment of the Court of Appeal delivered by Wolffe JA and would summarise those principles to be extracted from the judgment which are relevant to this case as follows (figures in square brackets are references to the relevant paragraph(s) of the judgment in Imperium):

(i)        The JCA's decision to issue a notice is susceptible to judicial review on conventional grounds, including Wednesbury unreasonableness.  It follows that, as Commissioner Beloff observed in Larsen v Comptroller of Taxes and States of Jersey [2015] (2) JLR 209 at paragraph 49(v) - "Even though the epithet reasonable has disappeared from the vocabulary of the 2008 Regulations as amended, it remains implicit in them". 

(ii)       The JCA has no power to require the provision of information which is not -˜tax information' as defined.  Accordingly, not only must the JCA itself be satisfied that the information which it requests is -˜tax information', but, if the matter is properly put in issue, the court must determine for itself whether the information required to be produced by a notice is -˜tax information' ([40] and [41]).

(iii)      It follows that, both at the leave stage and, if leave is granted, the judicial review itself, the JCA must place before the court sufficient information about the foreign tax regime and the tax purpose which has motivated the request to enable the court to determine whether the information sought in the notice is -˜tax information'.  This is consistent with the duty of candour discussed both in Larsen (supra) at paragraphs 17 and 18 and in Haskell v Comptroller of Taxes [2017] (1) JLR 230 at paragraphs 30 and 33.

(iv)     As to what is meant by -˜tax information', this is defined in both the 2008 and the 2014 Regulations as information which is -˜foreseeably relevant' to the administration and enforcement of the domestic tax laws of the requesting party.  As to what is meant by -˜foreseeably relevant', the Court of Appeal endorsed the approach of the Royal Court in previous cases such as APEF Management Company 5 Limited v Comptroller of Taxes [2014] (1) JLR 100 at para 18 and Prahl v The Office of the Comptroller of Revenue [2022] (1) JLR 100 ("the 2022 Judgment") at para 8 as to the assistance which could be derived from the Commentary on Article 26 of the Model Tax Convention on Income and Capital ("the Model Convention") published in 2012:

"The standard of 'foreseeable relevance' is intended to provide for exchange of information in tax matters to the widest possible extent and, at the same time, to clarify that Contracting States are not at liberty to engage in 'fishing expeditions' or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer.  In the context of information exchange upon request, the standard requires that at the time the request is made there is a reasonable possibility that the requested information will be relevant; whether the information, once provided, actually proves to be relevant is immaterial.  A request may therefore not be declined in cases where a definite assessment of the pertinence of the information to an ongoing investigation can only be made following the receipt of the information.  The competent authorities should consult in situations in which the content of the request, the circumstances that led to the request, or the foreseeable relevance of requested information are not clear to the requested State.  However, once the requesting State has provided an explanation as to the foreseeable relevance of the requested information, the requested State may not decline a request or withhold requested information because it believes that the information lacks relevance to the underlying investigation or examination.  Where the requested State becomes aware of facts that call into question whether part of the information requested is foreseeably relevant, the competent authorities should consult and the requested State may ask the requesting State to clarify foreseeable relevance in the light of those facts.  At the same time, paragraph 1 [of Article 26] does not obligate the requested State to provide information in response to requests that are 'fishing expeditions', i.e. speculative requests that have no apparent nexus to an open inquiry or investigation." [45] -“ [49] [Emphasis added]

(v)      In essence therefore, information is -˜foreseeably relevant' if there is a reasonable possibility that the requested information will be relevant; whether the information, once provided, proves to be relevant is immaterial. [45] The Court of Appeal did not agree that the emphasised passage in the above extract accurately reflects the law of Jersey. That is because both the JCA and, if engaged, the court have to be satisfied that the information sought in a notice is foreseeably relevant and therefore constitutes -˜tax information'.

(vi)     The JCA is not required to determine factual or legal disputes between the taxpayer/recipient of the notice and the tax authorities of the requesting authority.  It is ultimately for the relevant authorities, including the courts, of the requesting jurisdiction to determine any such disputes about the application of the laws of that jurisdiction.  Accordingly, the JCA may rely on the information about the foreign tax regime provided by the requesting competent authority unless, following a suggestion that the rules of the foreign tax regime or their implications have not been accurately stated by the requesting competent authority, such inaccuracy is plain and self-evident. [51]

7.        Although only referred to by implication in Imperium, I would emphasise the passage in the commentary to the Model Convention which states:

"The competent authority should consult in situations in which the content of the request, the circumstances that led to the request, or the foreseeable relevance of the request information are not clear to the requested State .

Where the requested State becomes aware of facts that call into question whether part of the information requested is foreseeably relevant, the competent authority should consult and the requested State may ask the requesting State to clarify foreseeable relevance in the light of those facts."

As both the JCA and the court must determine for themselves whether the information sought is -˜foreseeably relevant', it is necessary for the JCA to obtain clarification as to whether the information remains foreseeably relevant in the light of any reasonable points raised by the taxpayer or the recipient of the notice suggesting that such information is not -˜foreseeably relevant'.  If the JCA fails to revert to the requesting authority, it runs the risk that the court will find itself unable to be satisfied that the information sought remains -˜foreseeably relevant' notwithstanding the points made by the taxpayer/recipient of the notice.  In other words, what is required is for the requesting authority to be asked whether, and if so why, it remains of the opinion that the information sought is foreseeably relevant despite any points made by the taxpayer/recipient of the notice.  Armed with such a response, the court is likely to accept foreseeable relevance unless it considers that the response is plainly and self-evidently inaccurate. 

8.        As mentioned above, paragraphs (2) and (3) of Regulation 1A of the 2008 Regulations and the 2014 Regulations were inserted by the 2023 Amendment.  These amendments are entirely consistent with the approach to foreseeable relevance as articulated by the courts, but emphasise both the relevance of the Commentary on the Model Convention and the fact that the test is whether there is a reasonable possibility that the tax laws of the requesting state may apply to the taxpayer, so that it does not matter that there are matters that are still to be determined by the requesting authority in respect of the taxpayer's liability to tax. 

Factual background

9.        The evidence before me consists of an affidavit from Ms Charlmaine Vella, a director of Triton, two affidavits from Mr Per Holstad, a tax partner of Ernst & Young in Stockholm, who has provided advice to Mr Peder Prahl and Triton, and four affidavits from Mr Richard Summersgill, the Comptroller of Revenue, on behalf of the JCA.

10.     The two Notices were issued by the JCA on 5 October 2023 and were addressed to Triton.  The first ("the Addison Notice") relates to Addison Nominees Limited ("Addison") and the second ("the Bolero Notice") relates to Bolero Holdings Limited ("Bolero").  They were issued pursuant to a request by the Swedish tax authority ("STA") in connection with their investigation into the tax affairs of Mr Prahl, a Swedish national.  The request from the STA was made pursuant to the Convention on Mutual Administrative Assistance in Tax Matters ("the Convention") which has been extended to Jersey and to which Sweden is also a party.

11.     Both Notices began in the same way by stating:

"1.  I am in receipt of a request from the competent authority for Sweden.

2.   I have examined the request and, being satisfied that it has been validly constituted in conformity with the Convention on Mutual Administrative Assistance in Tax Matters, as it applies with respect to Sweden and Jersey, I have decided to respond to the request."

12.     The Addison Notice then goes on to provide as follows:

"3.       I require you to provide, within 30 days, the following tax information in respect of all companies ("the Companies") whose shares were held by Addison Nominees Limited ("Addison") as nominee, directly or indirectly for the benefit of Peder Prahl (the "Individual") (including, for the avoidance of doubt, where shares were held by Addison as nominee, directly or indirectly for the trustee(s) of a discretionary trust or settlement of which the Individual was a discretionary beneficiary or -˜object'), at any time during the period from 1 January 2017 to 31 December 2018, inclusive (the "period") -

a. Details of all shares held by Addison for the benefit of the Individual (as described above) at any time during the Period.  This should include the name and address of the company involved and the number and rights accorded to each type of share, including but not limited to voting rights and capital share rights;

b. Details of all payments made to the Individual during the period by Addison or the Companies, to include the name of the payer, a description of the type of payment, the amount and currency, payment date and details of the bank account to which the payment was made;

c. Details of the amount of carried interest to which the Individual was entitled, whether directly or indirectly, in respect of any of the Companies containing the word "Ampford" in their names, during the Period, and confirmation of the extent to which the carried interest was distributed to him during the period;

d. Copies of all agreements in place in respect of Addison's role as nominee shareholder, either between Addison and the Individual or between Addison and the Companies or between Addison and the trustee(s) of any discretionary trust or settlement or anyone acting on behalf of the Individual or Companies;

e. Financial statements of Addison covering the period to include all notes and directors reports;

f.  Statements of all transactions recorded during the Period in respect of any clearing or ledger accounts held by Addison in respect of the Individual; and

g.  Copies of statements for any Addison company credit cards held by the Individual covering the Period."

13.     Paragraph 3 of the Bolero Notice was in the following terms:

"I require you to provide, within 30 days, the following tax information for that purpose in respect of Bolero Holdings Limited (the "Company") -

a.     In respect of the sale of all of the Company's assets to Bolero Holdings Sarl in May 2018, please -

(i) procure that a director and/or another officer of Triton Administration Jersey Limited provides an explanation, in writing, through information held or any other means you may deem appropriate, of how the valuation of the assets was determined, in particular whether there was a valuation at fair market value or if the process was set at the investment cost for the Company;

(ii) provide copies of the agreement and the supporting documentation for the sale of the Company's assets, including any document or record relied upon to provide the explanation at point a.(i) above;

b.     Copies of financial statements of the Company covering the period from 1 January 2017 to 29 October 2018 (inclusive) (the "Period");

c.     Details of all dividends and other distributions, including but not limited to redemption payments, repurchase payments or loan payments, made by the Company at any time during the Period;

d.     Copies of statements of all transactions during the Period shown in the owner's account; and

e.     Copies of statements for any Company credit cards held by Peder Prahl covering the Period."

14.     The JCA previously issued two notices at the request of the STA in materially similar terms in 2020, although the period covered at that time was for the years 2015-2018.  The basis of the request was said to be the opinion of the STA that Mr Prahl was resident in Sweden for tax purposes during those years.  Triton and Mr Prahl challenged the relevant notices by way of judicial review.

15.     Mr Prahl vigorously disputed that he was resident in Sweden for tax purposes during the relevant period.  The evidence produced was set out in detail in the judgment but, in outline, the STA issued a proposed decision dated 4 December 2020 to Mr Prahl seeking his comments.  The proposed decision asserted that Mr Prahl should be taxed on the basis that he was resident in Sweden.  On 9 December 2020, Mr Prahl produced a detailed response setting out his grounds as to why he did not consider that he was tax resident in Sweden in the relevant years.  On 22 December 2020, the STA acknowledged this response and said that it would consider the matters set out in the response before reaching a decision.

16.     In the 2022 Judgment, the court quashed the decision of the JCA on the grounds that, having been placed on notice that the STA was reconsidering the issue of Mr Prahl's residence, the JCA failed to inquire of the STA whether it remained of the opinion that Mr Prahl was resident in Sweden.  Having failed to make such inquiry, it was unreasonable to remain of the view that the information sought was still foreseeably relevant.  Had the JCA done what it should have done and reverted to the STA inquiring whether it remained of this view and if the STA had responded saying that, despite Mr Prahl's submissions, it remained of the opinion that there was a reasonable possibility that he was resident in Sweden for tax purposes for the relevant years and why they remained of that view, that would have been sufficient and the judicial review would not have succeeded on that ground.

17.     Since then, a number of the years in respect of which information was originally sought have become time-barred under Swedish law.  Accordingly the present Notices only seek information in respect of the calendar years 2017 and 2018.  At the hearing, I was informed that 2017 was also now time-barred and accordingly information was only sought in respect of 2018.

18.     Since the 2022 Judgment, the STA has apparently applied for information concerning Mr Prahl's affairs in other jurisdictions.  According to Mr Holstad's second affidavit, it was stated in the course of submissions before the Administrative Court in Luxembourg that the STA "has come to the conclusion that [Mr Prahl] is tax resident and liable to tax in Sweden during the investigated period on his worldwide income and gains".  The affidavit does not state what the "investigated period" was nor what was the decision of the Luxembourg court.  It repeats however that Mr Prahl disputed the grounds relied upon by the STA as supporting its conclusion.

19.     I was also referred to the decision of the Royal Court of Guernsey in Mourant Trustees (Guernsey) Limited v Director of the Revenue Service [2023] GRC 034 ("the Guernsey case").  This involved notices under the equivalent Guernsey legislation which were issued by the Director at the request of the STA in connection with Mr Prahl's tax affairs.  The appeal against the Director's decision was based on the ground that the information required by the notices was not foreseeably relevant to the administration or enforcement of Swedish tax law and that the requirements were disproportionate in scope.  For the reasons set out in the judgment, the court dismissed the appeal and upheld the notices.

20.     According to paras 15-16 of Mr Holstad's second affidavit -“ and this does not appear to be disputed by the STA according to Mr Summergill's third affidavit -“ despite not receiving any Jersey information in respect of 2017, the STA has nevertheless raised an assessment on Mr Prahl for 2017 on the basis that he was tax resident in Sweden during that year.  Mr Prahl has appealed to the STA against that decision on the basis, inter alia, that he was not so resident.  If the STA maintains its original assessment, Mr Prahl can appeal to the Swedish courts.

21.     As at the date of the hearing before me, no assessment had been raised on Mr Prahl in respect of 2018 and the STA had not issued any formal decision that it regards Mr Prahl as having been tax resident in Sweden in 2018.  However, according to Mr Summersgill (see paras 29 and 35 of his second affidavit and paras 7-14 of his third affidavit), the STA remains of the opinion that Mr Prahl was tax resident in Sweden in 2018.  In his third affidavit, he sets out the matters relied upon by the STA for being of that opinion.

Grounds of judicial review

22.     Apart from a ground based on Article 6 ECHR arising out of the costs decision of the Court of Appeal in Imperium Trustees (Jersey) Limited v Jersey Competent Authority [2024] JCA 014, which ground is to be heard at a later date, Triton relies on three main grounds of judicial review.  These are:

(i)        The Notices are ultra vires as the information requested is not -˜tax information'.

(ii)       The decision to issue the Notices was irrational.

(iii)      The Notices are disproportionate. 

1. The information required is not -˜tax information'

23.     There are three elements to this ground, namely (i) tax residence; (ii) the effect of the UK/Sweden Double Tax Agreement ("DTA"), and (iii) particular aspects of the information required under the Notices.  I shall consider these in turn. 

(i)     Tax residence

24.     Mr Holstad states in his first affidavit that the determination/investigation of an individual's liability to tax in Sweden is commonly conducted as a two-step process, namely first gathering information on the question of residence and reaching a settled view on that issue; and secondly, once tax residence is assessed, proceeding to gather information on the income, gains etc for the purposes of raising an assessment.  He says that this makes sense as, if a person is not resident in Sweden, there is no need for the STA to investigate his income or gains.  Triton submits, in accordance with Mr Holstad's evidence, that information about a person's worldwide income and gains cannot be foreseeably relevant unless and until the STA has formed a view that the person concerned is tax resident in Sweden.  As there has as yet been no determination by the STA of Mr Prahl's tax residence for 2018, information about his income and gains cannot be foreseeably relevant.

25.     The STA, in a letter (whose date has for some unaccountable reason been redacted but which is a response to an email from the JCA dated 25 October 2024) exhibited to Mr Summersgill's fourth affidavit, dispute this evidence and assert that there is no two-step process as suggested by Mr Holstad; the tax residence of an individual is determined as part of the determination of his tax liability. 

26.     This is a classic example of a dispute between the requesting authority and the taxpayer/recipient of the notice about the rules of the tax regime of the requesting state, as envisaged at [51] of Imperium.  It is not for the JCA to determine what the correct position in Sweden is.  That will ultimately be a matter for the relevant authorities, including the courts, of Sweden to determine.  As Wolffe JA said at [51] of Imperium:

"If the requesting competent authority's position as regards the requirements of the foreign tax law is one which, though disputed, may, when tested in the courts of the requesting jurisdiction, be proved correct, the foreseeable relevance of the information sought may, as a general rule, properly be assessed by reference to that statement of the legal position even though it is a legal position which is disputed by the taxpayer."

27.     In my judgment, there is no question of the statement as to the correct position by the STA being plainly and self-evidently wrong.  In those circumstances, this aspect of Triton's argument suggesting that the information sought is not foreseeably relevant and is therefore not -˜tax information' cannot be accepted. 

28.     Advocate Cook then submits that the information required is not foreseeably relevant because the STA has not been requested by the JCA to address the arguments put forward by Mr Prahl in his response of 9 December 2020 as to why he was not tax resident in Sweden in 2018 (and earlier years).  Advocate Cook submitted that the position was just as it was at the time of the 2022 Judgment; there was no evidence before the court that the JCA had done what the court in the previous proceedings said it should have, namely go back to the STA and ask whether, in the light of the points made by Mr Prahl as to why he was not resident, the STA still considered him to be resident.  He pointed out that the matters relied upon by the STA, as summarised in Mr Summersgill's third affidavit, were exactly the same matters that the STA had relied upon in the previous proceedings.

29.     In my judgment, the present circumstances are very different from those in the previous proceedings.  In those proceedings, the STA had said in response to Mr Prahl's written letter pointing out why he considered he was not resident that it would reconsider the question of his tax residence, but there was no evidence as to what this reconsideration had concluded.  The JCA never went back to the STA and ask whether the STA remained of the view that Mr Prahl was tax resident.  There was therefore no satisfactory evidence before the court at that point that the STA was still of the reasonable view that Mr Prahl was tax resident.

30.     In the present case, as summarised at para 21 above, the evidence shows that, well over a year later, the STA is still of the view that Mr Prahl was tax resident in 2018, despite having been made aware of the arguments of Mr Prahl as to why he was not resident.  Accordingly, on the evidence before me in the affidavits, I cannot possibly say that the contention of the STA that Mr Prahl was tax resident in Sweden in the relevant years (including 2018) is plainly and self-evidently erroneous.  This will be a matter for the STA and ultimately the Swedish courts to determine following any assessment by the STA and any subsequent appeal in Sweden by Mr Prahl.  This court only has to be satisfied that there is a reasonable possibility that Mr Prahl will ultimately be found to be resident in Sweden and that therefore the requested information would be relevant.  The STA does not have to have formed a definite view that Mr Prahl was tax resident in 2018; it only has to satisfy the JCA that there is a reasonable possibility that he was so resident. I am in no doubt that that threshold is met in this case on the basis of the evidence before me.

31.     Advocate Cook's next point under this heading relates to the UK/Sweden DTA.  The argument arises as follows.

32.     Mr Prahl asserts that he was resident in the UK in 2018 (and indeed earlier years) where he has been paying tax and where he has a permanent home available to him whereas he does not have a permanent home available to him in Sweden.  It follows, Advocate Cook submits, that, even if (which he strongly denies) Mr Prahl was resident for tax purposes in Sweden in 2018, the effect of Article 4.2 of the DTA is that, for the purposes of the DTA, Mr Prahl would be treated as resident in the UK, with the consequence that his worldwide income and gains (including those arising in Jersey) would be taxed in the UK and not in Sweden.  In these circumstances, the information sought in Jersey could not possibly be foreseeably relevant to taxation in Sweden because, regardless of the content of the information, there could be no taxation liability in Sweden because of the tie-blocking provisions of the DTA. 

33.     The evidence shows that on 15 June 2023, Ernst & Young in London, on behalf of Mr Prahl, applied to HMRC under Article 23 of the DTA for HMRC to invoke the mutual agreement provisions set out in that Article with a view to a decision that, regardless of whether he was resident in Sweden for domestic tax purposes, the effect of the DTA is that it is the UK which has exclusive taxing rights in relation to Mr Prahl's non-Swedish income and gains, including any arising in Jersey. 

34.     The difficulty with this argument is that, although HMRC has apparently been in touch with the STA, no decision has been reached by HMRC on Mr Prahl's application. The position is therefore uncertain. In the circumstances, I cannot possibly find that there is no reasonable possibility, because of the DTA, that Mr Prahl would be subject to Swedish tax on his Jersey income or gains.  The information required in Jersey under the Notices is therefore foreseeably relevant notwithstanding the present position under the DTA.

35.     The third aspect of Ground 1 relates to certain parts of the Notices.  Advocate Cook submits that the financial statements of Addison, a nominee company, as requested at para 3(e) of the Addison Notice, cannot be foreseeably relevant to any tax liability of Mr Prahl; nor can the information about Bolero required at para 3(a)-(d) of the Bolero Notice be foreseeably relevant.

36.     The evidence shows that Triton has administered a number of investment funds and the STA is investigating whether Mr Prahl has derived income or gains, including by way of carried interest, in relation to his role in the management of these funds. 

37.     The JCA's response to Advocate Cook's argument is set out at paras 33 and 34 of Mr Summersgill's second affidavit.  I have to say that the response does not focus on the specific points made by Advocate Cook (which were made in similar terms in the statement of grounds and skeleton argument which accompanied the application for leave to apply for judicial review and were therefore well known to the JCA), but it does assert that there is a reasonable possibility that the required information concerning Bolero and Addison may prove relevant to the issue of carried interest, Mr Prahl's entitlement to such interest and whether he may also have profited from management fees.  The response states that there is also a reasonable possibility that the information concerning Addison may prove relevant to discerning relevant information about investments made by Addison as nominee on behalf of a trust of which Mr Prahl was a beneficiary and which may prove relevant with regard to assets or income from trusts imputed to Mr Prahl as a matter of Swedish tax law. 

38.     Although not mentioned by Mr Summersgill, support for his evidence can be gained from the draft decision of the STA dated 4 November 2020 (referred to at para 15 above).  This document contained the preliminary views of the STA at that time.  Paragraph 1.7.8 of the draft decision suggests that the carried interest attributed to Mr Prahl may be held indirectly via Bolero and the Bolero Trust (which was the subject of the Guernsey Judgment).  Paragraph 1.7.9 suggests that Mr Prahl had admitted being the settlor and beneficiary of the Bolero and Carezo Trusts in Guernsey and that he was the 100% beneficial owner of the trustee of the Carezo Trust via Addison as nominee. 

39.     This all supports the assertion that there is a reasonable possibility that the required information in relation to Bolero and the financial statements of Addison may be relevant to establishing the position concerning the carried interest and management fees which may be attributable to Mr Prahl.  I therefore reject Advocate Cook's argument.

2.      The decision to issue the Notices was irrational

40.     Advocate Cook submits that the decision to issue the Notices is Wednesbury unreasonable because (i) the JCA failed to have regard to the terms of the UK/Sweden DTA and, if it had, it could not have concluded that the information requested was foreseeably relevant, and (ii) the JCA failed to have regard to the fact that the STA had not yet made a firm decision on whether Mr Prahl was tax resident in Sweden in 2018.  In the absence of a clear decision, the JCA could not reasonably have concluded that the information requested was foreseeably relevant. 

41.     During the course of the hearing, Advocate Cook accepted that these two arguments stand and fall on my decision on Ground 1.  In my judgment, he was right to do so.  In relation to the DTA point, I have ruled that the position in relation to the DTA does not prevent the requested information from being -˜tax information'.  As the information is tax information, it cannot be unreasonable for the JCA to have required its production despite the position under the DTA.

42.     Similarly, in relation to residence, the fact that the STA has not yet reached a firm decision on tax residence is irrelevant.  As discussed under Ground 1, the correct question is whether there is a reasonable possibility that Mr Prahl will be found to have been tax resident in Sweden in 2018.  Given my conclusion in relation to Ground 1 that there is indeed such a reasonable possibility, it cannot possibly be Wednesbury unreasonable for the JCA to have reached a similar conclusion and to have decided to issue the Notices notwithstanding the lack of a firm decision on residence from the STA.

43.     Advocate Cook made a subsidiary point that it was irrational for the JCA to issue the Notices without first addressing both issues (the DTA and tax residence) with Mr Prahl.  I reject that argument.  In Larsen v Comptroller of Taxes [2015] (2) JLR 209, Beloff, Commissioner, concluded at [44] that, following the amendments to the 2008 Regulations in 2012 and 2013, it was no longer necessary for the JCA to offer a person who was to be the subject of a notice an opportunity to comment on the proposal and seek to persuade the JCA to abandon its plan.  He held that the JCA could do so if it thought fit, but it was not obliged to do so.  The decision in Larsen has been followed in other cases, including in the 2022 Judgment at [111].

44.     He also submitted that it was unreasonable not to have consulted with the STA on both issues. This point cannot succeed having regard to my decision in relation to Ground 1.

45.     Although it was not mentioned in Triton's skeleton, the statement of grounds in support of the application for leave raised an argument concerning the Jersey/Sweden DTA.  Advocate Cook touched upon this argument during his oral submissions although he accepted it was not addressed in his skeleton.  I considered that I should deal with it briefly for the sake of completion.

46.     Article 21(2)(e) of the Convention provides as follows:

"(2)  Except in the case of Article 14 [which is not relevant], the provisions of this Convention shall not be construed as to impose on the requested State the obligation:

.

(e)   to provide administrative assistance if and insofar as it considers the taxation in the applicant State to be contrary to the provisions of a Convention for the avoidance of double taxation which the requested State has concluded with the applicant State."

47.     Jersey and the Kingdom of Sweden entered into a double taxation agreement on 28 October 2008 and the effect of Articles 5 and 6 of that DTA is that employment income earned by Mr Prahl from employment in Jersey and director's fees earned by him from Jersey companies would both be taxable in Jersey rather than Sweden. 

48.     The argument put forward on behalf of Triton is that, as such income cannot be taxed in Sweden and will only be taxed in Jersey, it cannot be foreseeably relevant to Mr Prahl's Swedish tax position and accordingly information relating to such employment and director's fees cannot constitute tax information which can be required under the Notices.

49.     However, this argument is to ignore Article 11(2)(b) of the Jersey/Sweden DTA which provides as follows:

"Where a resident of Sweden derives income which, in accordance with the provisions of this Agreement, shall be taxable only in Jersey, Sweden may, when determining the graduated rate of Swedish tax, take into account the income which shall be taxable only in Jersey."

50.     In other words, even though any employment income earned in Jersey or director's remuneration from a Jersey company may not be taxed in Sweden, it may still be taken into account in Sweden when determining what rate of tax would be paid in Sweden on Mr Prahl's other income.  In those circumstances, it is clearly foreseeably relevant to the taxation position of Mr Prahl and information about such income constitutes tax information which can be required pursuant to a notice.

51.     Accordingly, I reject all of Triton's arguments on Ground 2.

3.       Breach of Article 8 ECHR; proportionality

52.     Triton argues that, in issuing the Notices, the JCA has acted in a way which is incompatible with Triton's rights under Article 8 ECHR.  That is because the requests contained in the Notices are disproportionate in scope. 

53.     In connection with what is meant by proportionality, I was referred to the well-known observation of Lord Sumption, speaking for the majority of the Supreme Court, in Bank Mellat v HM Treasury (No 2) [2014] AC 700 at [20]:

"20.  The requirements of rationality and proportionality, as applied to decisions engaging the human rights of applicants, inevitably overlap.  The classic formulation of the test is to be found in the advice of the Privy Council, delivered by Lord Clyde, in de Freitas v Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69, 80.  But this decision, although it was a milestone in the development of the law, is now more important for the way in which it has been adapted and applied in the subsequent case law . Their effect can be sufficiently summarised for present purposes by saying that the question depends on an exacting analysis of the factual case advanced in defence of the measure, in order to determine (i) whether its objective is sufficiently important to justify the limitation of a fundamental right; (ii) whether it is rationally connected to the objective; (iii) whether a less intrusive measure could have been used; and (iv) whether, having regard to these matters and to the severity of the consequences, a fair balance has been struck between the rights of the individual and the interests of the community.  These four requirements are logically separate, but in practice they inevitably overlap because the same facts are likely to be relevant to more than one of them ."

54.     Triton submits that, in circumstances where the STA has not meaningfully engaged with the consequences of the UK/Sweden DTA, it cannot be said that the demand for documents contained in the Notices is the least intrusive method available to address Mr Prahl's tax liability.  Nor can it be said that a fair balance has been struck between the rights of Mr Prahl and the community.  On the contrary, the JCA is exercising intrusive powers to demand information in circumstances where real issues arise as to the need for such information.

55.     In Imperium, the Court of Appeal considered the impact of Article 8 ECHR in connection with the issuing of notices.  It accepted at [130] that Article 8 was engaged but noted that, in accordance with its decision in that case, it would be the court itself determining whether the notice complies with the statutory requirements of Jersey law.  Wolffe JA went on to say:

"If the Notice in the present case is lawful, we doubt if it could be said to be disproportionate.  A lawful notice under the Regulations would serve an important public policy purpose -“ namely, Jersey's compliance with its obligations under the treaties to which we have referred and the substantive policy objectives to which those treaties are directed.  In the present case, the information sought would, ex hypothesi, if the notice is lawful, be foreseeably relevant to the administration of the tax regime of a jurisdiction with which Jersey has reciprocal treaty relations ."

56.     I respectfully agree with this observation.  The Convention specifically envisages that assistance should be given by one jurisdiction to another in relation to tax information, i.e. information that is foreseeably relevant.  Having held that the information requested in this case is tax information, there is a strong public interest in Jersey, through the JCA, fulfilling its obligations under the Convention and giving assistance to the STA in accordance with the Convention.  I do not see that any less intrusive method was available and nor do I accept that a fair balance has not been struck between the rights of Mr Prahl and/or Triton and the community.  Although the information to be supplied will be private information, it is of a nature which the Convention specifically envisages should be supplied and the disclosure would be for a specific and limited purpose, namely for the purposes of a tax investigation being undertaken by the authorities of a friendly jurisdiction which is also party to the Convention.  I therefore reject Triton's argument on Ground 3.

Conclusion

57.     For the reasons I have given, I dismiss all the non-Article 6 grounds for judicial review in this case.

Postscript

58.     In the 2022 Judgment, I emphasised at [117]-[118] the need for the JCA to be more forthcoming concerning the level of information which it provides in judicial review cases.  I emphasised that, if it does not explain its decision fully and clearly, there is a risk that decisions will go against it which will not be in the interests of Jersey's desire to assist in the fight against tax evasion.

59.     Since then, the Court of Appeal in Imperium has clarified that the court's role is not limited to assessing the reasonableness of the JCA's decision that the information sought is -˜tax information'; it is the court's duty to determine that issue for itself.  It follows that it is, if anything, even more vital that the JCA provides a comprehensive account of its decision and why it is satisfied that notices it has issued do indeed require -˜tax information'; otherwise, how is the court to satisfy itself that the information sought is -˜tax information'?

60.     This point was emphasised by the Court of Appeal itself in Imperium.  Thus at [41], the Court said:

"Both at the leave stage and, if leave is granted, the [JCA] would require to place before the Court sufficient information about the foreign tax regime and the tax purpose which has motivated the request to enable the Court to adjudicate on the question." [i.e. the question of whether the information sought is tax information].

61.     The court returned to the issue at [118] in the following terms:

"It is for the requesting competent authority to identify the tax purpose for which it seeks assistance from the [JCA], or otherwise to provide a proper basis upon which the [JCA] can conclude that the information sought satisfies the relevant legal test.  In turn, if the matters requires to be determined by the Court, it is for the [JCA] to place material before the Court upon which the Court may determine the lawfulness of the [JCA's] actions "

62.     Tax can of course be claimed by different countries on different bases.  Some may base it on residence, others on carrying on a business within the jurisdiction, others on earning property or other connections with the jurisdiction.  In order to comply with the observations of the Court of Appeal, it is necessary for the JCA to explain the basis on which there may be a tax liability in the requesting jurisdiction and how the information sought relates to that possible tax liability.  It also needs to revert to the requesting authority for clarification if reasonable questions are raised by the taxpayer or the recipient of the notice.  It remains of course the fact that information only needs to be foreseeably relevant but, as the Court of Appeal explains, that cannot be determined by the court unless it is provided with all the necessary information.

63.     I have to say that, in the present case, the JCA has shown some reluctance to give the appropriate level of information. As set out at para 37 above, the evidence of the JCA did not really get to grips with Triton's point concerning the Addison accounts and the information sought about Bolero.

64.     Similarly, at the directions hearing of September 2024, the JCA resisted the application on behalf of Triton that the JCA file further evidence and only agreed to do so during the course of the hearing.  Mr Summersgill's third affidavit was sworn as a result and it is of note that, as summarised earlier, that affidavit contains important information which greatly assisted the court in concluding that the requested information was foreseeably relevant and therefore amounted to -˜tax information'.  The filing of the further evidence therefore assisted the JCA in defending its decision despite its reluctance to file such evidence. 

65.     Mr Summersgill explained in his second affidavit the importance of the confidentiality provisions in the Convention, and the need to respect them, which I fully accept.  However it is always possible for the JCA to revert to the requesting authority and seek their agreement to disclose correspondence or other documents.  The approach of the JCA in this respect is to be contrasted with that of the relevant authority in Guernsey.  Thus in the Guernsey case, the judge stated at [14]:

"A perusal of the large volume of correspondence between [the Guernsey authority] and the Swedish authorities in [the Guernsey authority's second bundle], shows detailed questions being posed and lengthy responses to them "

66.     He makes the same point at [18] in the following terms:

" There is, also as has been mentioned, a considerable degree of correspondence between [the Guernsey authority] and the Swedish authorities, and information in great detail has been provided.  These communications also show, as had been made apparent, that [the Guernsey authority] has not acted as a rubber-stamp .."

It is clear from the judgment that the level of disclosure provided by the STA and the Guernsey authority greatly assisted the judge in upholding the Guernsey authority's decision. 

67.     I can only once again encourage the JCA, both in its own interest and in the public interest, to be more forthcoming in the evidence which it provides when applications for judicial review in respect of notices are made.

Authorities

Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008.

Taxation (Implementation) (Convention on Mutual Administrative Assistance in Tax Matters) (Jersey) Regulations 2014.

Triton Administration (Jersey) Limited v Comptroller of Revenue [2024] JRC 282.

Taxation (Exchange of Information -“ Amendment) (Jersey) Regulations 2023.

Imperium Trustees (Jersey) Limited v Jersey Competent Authority [2023] (1) JLR 229.

Larsen v Comptroller of Taxes and States of Jersey [2015] (2) JLR 209.

Haskell v Comptroller of Taxes [2017] (1) JLR 230.

APEF Management Company 5 Limited v Comptroller of Taxes [2014] (1) JLR 100.

Prahl v The Office of the Comptroller of Revenue [2022] (1) JLR 100.

Model Tax Convention on Income and Capital

Mourant Trustees (Guernsey) Limited v Director of the Revenue Service [2023] GRC 034.

Imperium Trustees (Jersey) Limited v Jersey Competent Authority [2024] JCA 014.

Bank Mellat v HM Treasury (No 2) [2014] AC 700.


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