Sanjay Shah: Denmark wins UK court appeal over Dubai trader’s alleged tax fraud

London's High Court had previously dismissed the claim

Denmark's tax authority has won its appeal to take legal action against Sanjay Shah and others over an alleged £1.5 billion fraud. Photo: Antonie Robertson/The National

Denmark's tax authority has won its appeal in the UK courts over an alleged £1.5 billion ($2 billion) fraud by Dubai hedge fund trader Sanjay Shah and scores of others.

London's High Court had previously dismissed a claim by Skat, Denmark's tax authority, to hear the case in the UK on the grounds it was not the proper place to bring a foreign tax claim.

Skat is seeking to take legal action against Mr Shah and 113 other defendants, many of which are companies in the UK.

It alleges Mr Shah was a central player in a scheme in which foreign businesses pretended to own shares in Danish companies and claim tax refunds for which they were not eligible.

Mr Justice Andrew Baker had dismissed the case last year, describing it as “politically motivated” and designed to make an example of those involved.

Following an appeal, Sir Julian Flaux, Chancellor of the High Court, has now upheld Skat's case.

“The appeal succeeds,” he said.

“The claims of Skat against the alleged fraud defendants are not inadmissible.

“Skat's case is that it was a victim of a sophisticated fraud in that the defendants never in fact held any shares in any of the relevant Danish companies, never received dividends from those companies and therefore had never had any tax withheld from them on those dividends so that there was no tax for Skat to refund.

“This alleged fraud is said to have been principally orchestrated from or carried out through entities based in England.

“In my judgment, this claim against the Skat defendants is not a claim to unpaid tax or a claim to recover tax at all. It is a claim to recover monies which had been abstracted from Skat's general funds by fraud.

“The alleged fraud defendants' submission that the claim to the refund is still a claim to tax is simply wrong as a matter of analysis and the judge fell into error in accepting that submission.”

The London case — which is expected to be the longest in UK High Court history — is just one avenue Denmark is pursuing in an attempt to recoup the rebates it says it unwittingly granted Mr Shah and others.

Mr Shah said his scheme was a "widely known and wholly legitimate trading strategy”.

Last year, Denmark brought criminal charges against Mr Shah and is seeking his extradition from Dubai.

Acting Danish state prosecutor Per Fiig said the severity of the case was such that Denmark could seek a 12-year prison sentence for Mr Shah — a longer sentence than such crimes usually carry.

In 2020, Danish authorities froze many of Mr Shah's assets, including a £15 million home near Hyde Park in London.

Mr Shah, who is British, moved to Dubai in 2009.