Can Brexit save UK traders from facing EU cum-ex charges?
19 January 2021 UK
Image: Alex_Segre/adobe.stock.com
London trader Vijaya Sankar has become the first person facing cum-ex-related tax fraud charges to argue in a UK court that the conclusion of the Brexit transition period means the European arrest warrant against him no longer affords German prosecutors any right to extradite him.
The outcome of the hearing, which is expected later this week, could be hugely significant for the future of extraditions between the UK and Europe, including the future cum-ex related cases which are widely expected.
The Office of Public Prosecution in Cologne brought charges of tax fraud against Sankar — who is understood to still be an employee at UK asset manager Duet Group — in April 2020 and issued a European Arrest Warrant to force him into facing the charges in Germany.
Sankar, represented by business crime solicitors Rahman Ravelli, first appeared before Westminster magistrates in June 2020 to fight the charges.
A further two-day trial began on 15 January, where Sankar’s legal team argued that as the UK withdrew from the European Arrest Warrant scheme as of 1 January 2021 there is no longer any power to extradite any individual under part one of the Extradition Act 2003.
This legal framework is the avenue used in 90 per cent of extraditions from England and Wales, according to Rahman Ravelli.
The application, known as habeas corpus, is an ancient remedy – derived from the Magna Carta – allowing individuals to be brought before a court to challenge the lawfulness of their detention, a spokesperson for the law firm explains.
The case, which ended yesterday, was heard before the president of the Queen’s Bench Division of the High Court, Lord Justice Holroyd, and Mr Justice Chamberlain.
The cum-ex scandal is estimated to have deprived various European tax authorities of around €55 billion in revenue between roughly 2007 and 2011 when various tax law loopholes were closed.
The nature of UK tax law means Her Majesty's Revenue and Customs was not significantly affected, compared to its German and Danish counterparts, which are now leading the charge to recoup losses before the 10-year statute of limitations ends.
However, several persons of interest and those charged so far are UK residents or were based in London during the period in question, meaning the imminent ruling could define future rules of engagement between accused and prosecutors.
It is unclear how many European arrest warrants related to cum-ex tax fraud may be affected by the ruling, but more than 600 people are understood to be under investigation by European prosecutors.
Elsewhere, the UK’s Financial Conduct Authority is due to release a report into its investigation into cum-ex trading, which is expected to reveal how cooperative the regulator plans to be with its EU peers on the matter going forward.
The report was expected by the end of 2020 but is yet to see the light of day, with no timetable available.
The outcome of the hearing, which is expected later this week, could be hugely significant for the future of extraditions between the UK and Europe, including the future cum-ex related cases which are widely expected.
The Office of Public Prosecution in Cologne brought charges of tax fraud against Sankar — who is understood to still be an employee at UK asset manager Duet Group — in April 2020 and issued a European Arrest Warrant to force him into facing the charges in Germany.
Sankar, represented by business crime solicitors Rahman Ravelli, first appeared before Westminster magistrates in June 2020 to fight the charges.
A further two-day trial began on 15 January, where Sankar’s legal team argued that as the UK withdrew from the European Arrest Warrant scheme as of 1 January 2021 there is no longer any power to extradite any individual under part one of the Extradition Act 2003.
This legal framework is the avenue used in 90 per cent of extraditions from England and Wales, according to Rahman Ravelli.
The application, known as habeas corpus, is an ancient remedy – derived from the Magna Carta – allowing individuals to be brought before a court to challenge the lawfulness of their detention, a spokesperson for the law firm explains.
The case, which ended yesterday, was heard before the president of the Queen’s Bench Division of the High Court, Lord Justice Holroyd, and Mr Justice Chamberlain.
The cum-ex scandal is estimated to have deprived various European tax authorities of around €55 billion in revenue between roughly 2007 and 2011 when various tax law loopholes were closed.
The nature of UK tax law means Her Majesty's Revenue and Customs was not significantly affected, compared to its German and Danish counterparts, which are now leading the charge to recoup losses before the 10-year statute of limitations ends.
However, several persons of interest and those charged so far are UK residents or were based in London during the period in question, meaning the imminent ruling could define future rules of engagement between accused and prosecutors.
It is unclear how many European arrest warrants related to cum-ex tax fraud may be affected by the ruling, but more than 600 people are understood to be under investigation by European prosecutors.
Elsewhere, the UK’s Financial Conduct Authority is due to release a report into its investigation into cum-ex trading, which is expected to reveal how cooperative the regulator plans to be with its EU peers on the matter going forward.
The report was expected by the end of 2020 but is yet to see the light of day, with no timetable available.
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