Jonathan Peacock QC considers an important element in any request for the provision of tax information by one tax authority to another in light of the recent Privy Council decision in Volaw Trust and Corporate Services Ltd v The Office of the Comptroller of Taxes (Jersey)  UKPC 29 (17 June 2019)
Given the increasing “internationalisation” of tax compliance, it is now quite commonplace for a Tax Authority in State A to ask its counterpart in State B for information about a taxpayer’s affairs. Such requests can be made under the EU Mutual Assistance Directive (originally 1977/799/EEC and now a part of 2011/16/EU), the EU Mutual Assistance Recovery Directive (originally 2008/55/EC and now 2010/24/EU), the EU Directive on Administrative Cooperation in the Field of Taxation (Directive 2011/16/EU, “DAC”) or under the OECD/Council of Europe Convention for Mutual Administrative Assistance in Tax Matters. Likewise, requests might be made under bilateral Tax Information Exchange Agreements (“TIEAs”) or under bilateral double tax agreements (“DTAs”) where the provision of information rules are typically based on Article 26 of the OECD Model Convention on Income and on Capital.
Specific provision is made in the UK in s.173 Finance Act (“FA”) 2006 permitting HM Revenue & Customs (“HMRC”) to provide such information where the information is “foreseeably relevant” to the administration, enforcement or recovery of any UK or foreign tax.
Challenges to such requests in the UK can only be made by way of judicial review and the hurdle that the taxpayer must cross is high – see the FTT decision in Application by HMRC (re Certain Taxpayers)  UKFTT 765 and the related judicial review proceedings in Derrin Bros v HMRC  EWCA Civ 15. There are, however, still some constraints on the information provision process.
By way of overview:
Against that background the recent Privy Council decision in Volaw, in the context of the provision of information by Jersey to Norway relating to Jersey trusts and companies, is noteworthy.
The main dispute in the case was about whether the notices served on Volaw in Jersey were compatible with the European Convention on Human Rights, article 6 and whether they accorded with the (Jersey) law privilege against self-incrimination. In relation to the requirement under article 6(4) of the Jersey/Norway TIEA that the information be obtainable under Norwegian law, the Court had to decide whether the Comptroller in Jersey (seeking to require Volaw to provide the information) was obliged to consider whether the documents specified in the notices could be obtained under Norwegian law, and, if they could not be, to refuse a TIEA request.
Article 6(4) of the Jersey/Norway TIEA provides:
“The requested party shall not be required to obtain and provide information which if the requested information was within the jurisdiction of the requesting party the competent authority of the requesting party would not be able to obtain under its laws or in the normal course of administrative practice.”
In the shortest part of the decision, Lord Reed, for the Privy Council, simply concluded that because Jersey adopts a dualist approach to international law (such that the Jersey/Norway TIEA does not form part of the domestic law of Jersey), article 6(4) cannot provide a basis for challenging the validity of the TIEA notices under Jersey law. In effect, because the agreement entered into by Jersey (which does limit the scope of a demand for information) is not itself, formally, a part of Jersey law, no complaint can be made by reference to the terms of the agreement itself.
Lord Reed went on, however, to conclude that because the Norwegian Tax Authority had stated expressly that the relevant information would be obtainable in Norway, such a statement (an assertion) would have been sufficient for the Comptroller in Jersey to proceed “at least in the absence of any circumstances casting doubt upon its accuracy”. In effect, once the requesting State asserts that the procedural requirements of a TIEA are met, the State the subject of the request can proceed without further enquiry unless (perhaps) put on notice of some defect in the request.
While understandable from a practical, revenue-gathering, point of view, such an approach does give rise to the risk that requests under TIEAs will be made and complied with, with little judicial supervision of the validity of the request. It also might be seen as the Court accepting “an official’s simple assertion that a power had been exercised lawfully”.
They do things differently in New Zealand?
Jonathan Peacock QC
 And see the Implementing Regulation 2015/2378.
 And see the International Mutual Administrative Assistance in Tax Matters Order, SI 2007/2126.