Taylor Fladgate & Yeatman Ltd v Comptroller of Taxes, acting as competent authority for Jersey

CourtRoyal Court
JudgeJ. A. Clyde-Smith
Judgment Date12 March 2014
Neutral Citation[2014] JRC 64
Date12 March 2014

[2014] JRC 64




J. A. Clyde-Smith, Esq., Commissioner, sitting alone.


Taylor Fladgate & Yeatman Limited
Comptroller of Taxes, acting as competent authority for Jersey

Advocate M. H. D. Taylor for the Applicant.

Advocate G. G. P. White for the Respondent.


Royal Court Rules 2004.

Taxation (Exchange of Information with Third Countries)(Jersey) Regulations 2008.

Planning & Environment Committee v Lesquende Ltd [1998] JLR 1 .

Council of Civil Service Unions v Minister for Civil Service [1984] 3 All ER 935 .

Volaw and another v Office of the Comptroller of Taxes [2013] JCA 239 .

APEF Management Company 5 Limited v Comptroller of Taxes [2013] JRC 262 .

Judicial Review Handbook 6th edition by Michael Fordham.

Yates v Minister of Planning and Environment [2006] JRC 167 .

Sharma v Antoine [2006] UKPC 57 .

De Smith Seventh Edition.

Acturus Properties Limited and 47 others v The Attorney General [2001] JLR 43 .

Re Kaplan [2009] JLR 88 .

Taxation — application for leave to apply for judicial review of an administrative decision of the Comptroller of Taxes.


The applicant (“Taylor Fladgate”) applies under Rule 16/2 of the Royal Court Rules 2004 for leave for the Judicial Review of an administrative decision by the respondent (“the Comptroller”) to issue a notice to Taylor Fladgate dated 22 nd November, 2013 (“the Notice”) under Regulation 3 of the Taxation (Exchange of Information with Third Countries)(Jersey) Regulations 2008 (as amended) (“the Regulations”). Pursuant to Rule 16/2(4) I directed that the application for leave be listed for an oral hearing and that the Comptroller be given notice of that hearing.


The Comptroller (or where applicable the Deputy Comptroller), as the duly authorised representative of the Minister for Treasury and Resources, is the competent authority for Jersey for the purposes of the Regulations.


Taylor Fladgate, a Jersey incorporated company, is the 99.93% shareholder of the Fladgate Partnership SA, a Portuguese resident company, which in turn owns 100% of Quinta and Vineyard Bottlers — Vinhos SA (“QVB”).


QVB is a Portuguese resident company engaged in the production of port and pays royalties to Taylor Fladgate for the use of certain trademarks owned by Taylor Fladgate, namely “Taylor's”, “Fonseca Guimaraes”, “Romariz” and “Skeffington”. The amounts of those royalties have been and continue to be the subject of dispute between the Portuguese tax administration services and QVB.


Jersey entered into an agreement with the Portuguese Republic for the exchange of information relating to tax matters, which came into force on 9 th November, 2011 (“the TIEA”) which is in the form which is now familiar to the Court.


On 5 th July, 2013, the Comptroller received a request from the competent authority in Portugal (“the Portuguese Competent Authority”). It was examining transfers between QVB and Taylor Fladgate and was seeking to establish the legal and beneficial ownership of Taylor Fladgate. The Deputy Comptroller pointed out to the Portuguese Competent Authority that the request referred to the tax years 2010 and 2011, before the TIEA came into force. The Portuguese Competent Authority acknowledged that the request did not fall within the scope of the TIEA and therefore submitted a revised request limited to the period 2012.


On 20 th August 2013, the Deputy Comptroller issued a notice (“the first notice”) to Taylor Fladgate pursuant to Regulation 3(1) of the Regulations (as then in force), seeking the following information:–

“a. Details of the legal and ultimate beneficial ownership of Taylor Fladgate, indicating the percentage of participation in the share capital, voting rights or rights to the income or the assets of the company.

b. Details of the periods of ownership (legal and/or beneficial) of Taylor Fladgate of the persons identified in 3A above, from 1st January 2012 to the present date, including details of any changes of ownership.

c. Details of the income and profits of Taylor Fladgate for the year ended 31st December 2012.”


The persons under examination were listed as Taylor Fladgate and QVB. On the same day, the Deputy Comptroller wrote to QVB as the taxpayer, enclosing a copy of the first notice and a written summary of the reasons for the giving of the first notice.


Taylor Fladgate issued a notice of appeal on 9 th September 2013. It filed evidence in support of its appeal, and in particular, an affidavit from Mr Antonio Jaime Carvalho Esteves dated 24 th October, 2013. Mr Esteves is the lead tax partner of PricewaterhouseCoopers and Associados — Sociedade de Revisores Oficiais de Contas Lda. in Porto which had acted for QVB over a number of years. It seemed questionable to the Deputy Comptroller from that affidavit whether information as to the beneficial ownership of Taylor Fladgate was “foreseeably relevant” to the assessment and collection of taxes due by QVB, and that therefore the request was outside the scope of Article 1 of the TIEA and Regulation 1A of the Regulations.


It appeared more likely to the Deputy Comptroller that the taxpayer subject to the request was not to be identified with QVB but with the as yet unidentified Portuguese resident beneficial owners of Taylor Fladgate.


The Deputy Comptroller sought clarification of the request from the Portuguese Competent Authority. His email to the Portuguese Competent Authority of 30 th October, 2013 was in the following terms:–

“Thank you very much for your promised assistance.

Specifically, I realise that I may have misunderstood the original request as the parties under examination (the taxpayers on whom the possible liability may fall) were not clear to me.

Initially I thought that the Portuguese company QVB should be considered the taxpayer and that tax adjustments would be made on the company. However, on reading the submissions of the appellants and reconsidering the wording of the request, I now recognise that perhaps the taxpayer is more accurately to be identified as a class of individuals or corporate entities, the beneficial owners of the Jersey company, TFY [Taylor Fladgate], who may be resident in Portugal.

Can you confirm whether the taxpayer under examination is to be correctly identified as QVB or a class of Portuguese owners of TFY, or both?

If the latter, I need to counter the argument that the request represents a “fishing expedition”. I have been pointed to the commentary on Article 26 of the OECD Model Tax Treaty: where a request relates to “… a group of taxpayers not individually identified, it will often be more difficult to establish that the request is not a fishing expedition, as the requesting State cannot point to an on-going investigation into the affairs of a particular taxpayer which in most cases would by itself dispel the notion of the request being random or speculative. In such cases it is necessary that the requesting State provide a detailed description of the group and the specific facts and circumstances that have led to the request, an explanation of an applicable law and why there is reason to believe that the taxpayers in the group for whom the information is requested have been non-compliant with that law supported by a clear factual basis. It further requires a showing that the requested information would assist in determining compliance by the taxpayers in the group”.

If I am now correct in estimating that in this request the real persons under investigation who will potentially be liable to tax are the potential Portuguese owners of TFY, it will assist me enormously if you can provide the corresponding information identified in the commentary, specifically:

  • 1) a detailed description of the group

  • 2) the specific facts and circumstances that have led to the request

  • 3) an explanation of the applicable law

  • 4) why there is reason to believe that the taxpayers in the group for whom the information is requested have been non-compliant with that law

  • 5) a showing that the requested information would assist in determining compliance by the taxpayers in the group.

Based on your response, I may consider that it is best to issue an amended Notice to the Jersey company. I should like to do that, if it is appropriate, at the end of next week, 8th November. Therefore any clarification that you can provide in this respect before then will be very much appreciated.”


The Portuguese Competent Authority responded on 8 th November, 2013 with a detailed analysis in response to the Deputy Comptroller's request supplementing the original letter of request in which it described an ongoing investigation, listed by name the group of taxpayers who will be potentially taxed following the ongoing investigation and addressing the other questions where he had sought clarification.


On 22 nd November, 2013, and following consideration of that further information, the Comptroller withdrew the first notice and issued the Notice (which is the subject of this application) under Regulation 3(1) of the Regulations which had now been amended. The Notice lists the persons under examination as “the beneficial owners of Taylor Fladgate & Yeatman Limited resident in Portugal” and Taylor Fladgate.

Amendment to Regulations

On 6 th November, 2013, the Regulations were amended. The threshold in Regulation 3(1) was now reduced to the following:–

“3 Provision by other persons of tax information about taxpayer

(1) Where the competent...

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