Revenue and Customs & Anor v Ben Nevis (Holdings) Ltd & Ors

The Revenue Rule prevents direct or indirect enforcement of foreign revenue claims unless displaced by legislation or an applicable treaty. Mutual-assistance provisions in a tax convention must be construed in context and by reference to their purpose, rather than by a strictly literal approach. Where a later protocol introduces tax-collection assistance and contains its own entry-into-force provision, that provision governs the temporal scope of the new assistance mechanism. It may apply to existing revenue claims where the request for assistance is made after the protocol enters into force. The statutory jurisdiction to set aside transactions at an undervalue may operate extra-territorially where there is a sufficient connection with England and England is the appropriate forum. A criminal restraint order does not necessarily eliminate the risk justifying a freezing order.

HMRC and the South African Revenue Service sought to recover South African tax liabilities owed by Ben Nevis (Holdings) Ltd. HMRC relied on Article 25A of the 2002 UK–South Africa Double Tax Convention, as inserted by the 2010 Protocol. The claimants also sought relief under section 423 of the Insolvency Act 1986 concerning the transfer of assets to Metlika Trading Ltd, and freezing relief over a London bank deposit.

The defendants challenged service out of the jurisdiction, the enforceability and temporal scope of Article 25A, SARS’s standing, the joinder of HSBC Trustee (Guernsey) Ltd, the appropriateness of England as the forum, and the continuation of the freezing order.

1. Tax recovery claim. The Revenue Rule remains part of English law, subject to displacement by primary legislation, secondary legislation that is not ultra vires, or treaty-based mutual assistance. Article 25A was not subject to the temporal restrictions in Article 27 of the 2002 Convention. Article VI of the 2010 Protocol was the operative entry-into-force provision for Article 25A. Accordingly, once the Protocol entered into force, Article 25A applied to revenue claims falling within its terms, including pre-existing claims, provided the request for assistance was made after entry into force.
2. The presumption against retrospectivity did not prevent future enforcement of existing tax debts. The change affected future enforcement, not the legal character of past transactions or the underlying tax liabilities. The Article 1 First Protocol Convention argument therefore failed.
3. SARS and HSBC Trustee. Article 25A(3) provided the exclusive route by which the Revenue Rule was displaced for collection of a foreign revenue claim: collection had to be undertaken by the competent authority of the collecting state. SARS therefore had no arguable basis for maintaining the section 423 claim. HSBC Trustee was neither a necessary nor proper party, and its possible possession of documents did not justify joinder.
4. HMRC’s section 423 claim. The section 423 jurisdiction was extra-territorial. There was a sufficient connection with England because the alleged transaction concerned assets represented by a debt owed by a London bank, HMRC had an arguable tax-recovery claim against Ben Nevis, and the section 423 claim was closely connected with that claim. England was the appropriate forum because equivalent proceedings in Guernsey would be barred by the Revenue Rule and would undermine the practical value of relief concerning the London deposit.
5. Freezing order. The established requirements were a good arguable case, a real risk that judgment would go unsatisfied through asset disposal, and justice and convenience. A restraint order obtained in separate criminal proceedings did not remove the risk because it was controlled by different authorities and might later be discharged. The alleged non-disclosures did not justify discharge; even if there had been a breach, discharge would have been disproportionate.
6. Permission to serve out was set aside insofar as the proceedings were brought by SARS and against HSBC Trustee. The jurisdiction and freezing-order challenges were otherwise dismissed, subject to further argument on the scope of the freezing order against Metlika Trading.