Update: Jersey’s First Challenge Against Disclosure Under A Tax Information Exchange Agreement

[VOLAW TRUST V COMPTROLLER OF TAXES [2013]JCA239]

The Court of Appeal has dismissed the appeal and confirmed the requirement upon the appellant, Volaw Trust, to disclose the requested information to a foreign tax authority pursuant to regulation 3 of the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008 ("ReguIations"),.

FACTS:

In 2010, the Jersey Comptroller of Taxes ("Comptroller"), having received a request for information from foreign authorities pursuant to a Tax Information Exchange Agreement ("TIEA"), issued a formal notice to Volaw Trust requiring it, pursuant to the Regulations, to furnish "all information, documents, correspondence, financial statements, files and details of any other information concerned with or connected to the named subjects" (being an individual and four companies).

Volaw appealed the Comptroller's decision to the Royal Court of Jersey which, in May 2013, dismissed the appeal, but gave permission for Volaw to appeal the matter to the Court of Appeal. Until such appeal was heard, the Royal Court stayed enforcement against Volaw of the requirement to provide the foreign tax authority with the requested information.

THE COURT OF APPEAL

The grounds for appeal were substantially the same as heard before the Royal Court. The Court of Appeal dismissed the appeals upholding the decision of the Royal Court and, consequently, confirmed Volaw was to produce the information required of it pursuant to the formal notice from the Comptroller. However, the Court of Appeal did say that the information was to be made available by Volaw to the foreign tax authority to afford it with assistance in connection with the potential tax liability of only the individual concerned, and not (in connection with) any of the Jersey companies named in the notice.

POSSIBLE PRIVY COUNCIL APPEAL

However, it is worth noting two further related judgments of the Court of Appeal ([2013]JCA26O and [2013]JCA261) regarding a possible appeal by Volaw to the Privy Council. The Court of Appeal refused permission to appeal, but Volaw may also seek permission to appeal directly from the Privy Council. If such permission is granted, the enforcement of the Comptroller's notice against Volaw will, again, be stayed until the Privy Council reaches its judgment. If the Privy Council refuses permission to appeal, the notice against Volaw will come into effect and it will be required to disclose accordingly.

FACTORS TO NOTE

Due to...