Harneys hosted its first quarterly seminar of 2017 in the BVI on the subject of judicial review and the recent decision of the High Court concerning tax-information exchange agreements (TIEAs).
The topic was chosen in light of the recent uncertainty as to what information the International Tax Authority (the ITA) should provide when issuing a notice to registered agents and companies to disclose sensitive information relating to taxpayers and finances, as well as the important decision of the BVI High Court in the judicial review claims in Friar Tuck Limited v ITA and Quiver Inc v ITA, in which Harneys acted for both the successful claimants.
The seminar began with an introduction to the complexities surrounding international tax-information exchange requests, and how these are often dealt with. Where a TIEA exists between the BVI and another country, the two states are able to ask each other to require private individuals (including companies) in their territories to provide information in their possession relating to taxpayers and tax periods. If a request is properly made to the BVI, the ITA will issue a notice to the relevant person whom it believes is likely to have the necessary information. The registered agent or company must then decide whether or not it should comply with the notice. The discussion then turned to a consideration of the nature, purpose, and importance of judicial review proceedings, and how the acts and decisions of public bodies like the ITA can be challenged by judicial review. In the Friar Tuck and Quiver Inc claims, the two companies had received notices from the ITA that failed to give any information as to the request the ITA had received or the tax inquiry for which the information was required. This meant that the companies could not satisfy themselves that the request and the notices were valid. Without this, they could not decide whether or not they were required to comply with the notice: if they wrongfully complied with an unlawful notice, they could be disclosing private, confidential information; if they wrongfully refused to comply with a lawful notice, they risked criminal penalties.
The companies brought judicial review proceedings on the basis that the ITA had breached its duties of procedural fairness. Giving judgment in the claims, the Honourable Justice Vick-Ann Ellis stated that the ITA should provide companies and registered agents with such information as is necessary to demonstrate that the request and the notice are lawful, including as a minimum details of the state that had made the request that had led to the ITA’s notice, the tax period under investigation, and a summary of the nature of the foreign state’s investigation. An insight into the commercial ramifications of the decision of the High Court, both in the context of the BVI’s regulatory landscape and against the broader backdrop of international attempts to prevent money laundering and unlawful tax evasion, was provided by Harneys’ guest speaker, Jake Williams, chairman of the Madison Pacific Group and former deputy group chief risk officer at Standard Chartered Bank.