UK Supreme Court Clarifies Application of Revenue Rule in Skatteforvaltningen v Solo Capital Partners Case

Citation: [2023] UKSC 40
Judgment on


In the case of Skatteforvaltningen v Solo Capital Partners LLP and others, the UK Supreme Court provided a definitive stance on the application of the revenue rule and its scope within the context of foreign tax law enforcement. This appeal presented an opportunity to explore the limits of the revenue rule and the wider sovereign authority rule, as they pertain to the admissibility of claims made by a foreign state within UK jurisdiction.

Key Facts

The Danish Customs and Tax Administration (Skatteforvaltningen) brought legal actions against Solo Capital Partners LLP and associated parties, alleging that fraudulent claims were made which led to the wrongful payment of approximately £1.44 billion in Danish dividend withholding tax refunds. The appellants argued that the respondent’s claims were inadmissible because they sought to enforce Denmark’s revenue laws indirectly, invoking the principle that English courts do not entertain actions for the enforcement of foreign state’s penal, revenue, or public laws.

The initial ruling by Andrew Baker J found the claims inadmissible, but this decision was overturned by the Court of Appeal. The appellants then appealed to the Supreme Court on three grounds, all related to the application of the revenue rule and sovereign authority rule.

The central legal principle at issue in the appeal was the revenue rule and its companion, the sovereign authority rule, encapsulated in Dicey, Morris & Collins Rule 20(1). The appellants’ argument was predicated on the view that claims related to foreign tax collection are inadmissible in the UK courts. The Supreme Court placed focus on the nature of the claims to determine if they were indeed an assertion of sovereign authority or an act to enforce revenue laws.

The Supreme Court firmly established that the revenue rule is limited to situations where a sovereign state attempts to directly or indirectly recover taxes that are due. In contrast, the respondent’s claim was found to be restitutionary in nature, aiming to recover monies derived from fraudulent conduct and not the enforcement of tax as such. Thus, the respondent was seen as a victim seeking redress for a fraud akin to any private individual in the same situation.

Further, the Court considered the wider sovereign authority rule, which was found inapplicable because the respondent was not exerting its sovereign powers or claiming a public right.


The Supreme Court’s decision led to a dismissal of the appellants’ appeal, thereby affirming the Court of Appeal’s earlier decision which allowed the respondent’s claim to proceed. The Supreme Court clarified the revenue rule’s inapplicability to the facts of the case, reinforcing that the respondent is not invoking sovereign authority to reclaim taxes due but is instead seeking compensation for an alleged fraud.


The Supreme Court’s judgment underscores the nuanced understanding of the revenue and sovereign authority rules within the UK’s jurisprudence. It delineates the contours of these principles, establishing that private law claims made by foreign states in UK courts are admissible unless they directly or indirectly enforce that state’s revenue or public laws. This case signifies not only clarity in the application of international legal principles but also serves as a precedent concerning the admissibility of similar claims by foreign states in the United Kingdom.

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