Jonathan Peacock 11 New Square

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) [2019] 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”[1]) 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[2].


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) [2012] UKFTT 765 and the related judicial review proceedings in Derrin Bros v HMRC [2016] EWCA Civ 15. There are, however, still some constraints on the information provision process.


By way of overview:

  • Article 26, OECD requires the provision of information by State A to State B where the information is “foreseeably relevant” to some tax enquiry but limits this, somewhat, in that information does not have to be provided where the information “is not obtainable under the laws or in the normal course of the administration of [State A or State B]”.


  • The OECD Manual on Exchange of Information (2006) reiterates that Article 26 envisages information exchange to “the widest possible extent”, but that this does not extend to “fishing expeditions” which it characterises as “speculative requests for information that have no apparent nexus to an open inquiry or investigation”. The Manual also suggests that a request for information should, ordinarily, identify (inter alia) the legal basis upon which the request is based, the means already adopted to obtain the information, a statement that the request is in conformity with the laws and administrative practices of the requesting State, the identity of the person under examination or investigation, the identity of any foreign taxpayer or entity relevant to the examination or investigation, the name, addresses and TIN (if known) of any intermediary involved (e.g. a bank) and relevant background information including the tax purpose for which the information is sought.


  • The request should also identify the origin of the enquiry, the reasons for the request, the grounds for believing that the information requested is held in the territory of the requested party (or is in the possession or control of a person within the jurisdiction of the requested party), the taxes concerned, the tax periods under examination and the tax periods for which information is requested.


  • If there is no clear explanation of the material sought, the request can be refused: see Comptroller of Income Tax v AZP [2012] SGHC 112 (Singapore).


  • A similar line is taken under Council Directive 2011/16/EU on administrative cooperation in the field of taxation. In Berlioz Investment Fund SA [2017] EUECJ C-682/15 (16 May 2017) the CJEU confirmed, inter alia, that the procedural requirements (in Article 20 of the Directive) “need to be interpreted liberally in order not to frustrate the effective exchange of information”.


  • Such ‘liberal’ interpretation of the procedural requirements cannot, however, be taken too far: see the decision in the New Zealand High Court in Chatfield & Co v Commissioner of Inland Revenue [2017] NZHC 3289) where the Court refused to proceed simply on the basis of an assertion by the NZ Tax Authority that the foreign information request was valid and, instead, determined that “the days when a Court will accept an official’s simple assertion that a power had been exercised lawfully are long over” (Wylie J at [85]).


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

September 2019

[1] And see the Implementing Regulation 2015/2378.


[2] And see the International Mutual Administrative Assistance in Tax Matters Order, SI 2007/2126.