31 March 2017, the BVI Administrative Court held that statutory requests and notices issued for the mutual exchange of information should be subject to the same principles of fairness as any other decision or act made by a functionary of a public body, which cannot be eclipsed by a duty of confidentiality.
In Quiver Inc. & Friar Tuck Ltd. v International Tax Authority, two BVI companies were granted leave to challenge the issue by the BVI International Tax Authority (ITA) of Notices under section 5(1) of the Mutual Legal Assistance (Tax Matters) Act 2003 to produce information for the purpose of the BVI complying with a request from another state under a tax information exchange agreement (TIEA).
It was the ITA’s practice not to provide the recipient of such a Notice with information in respect of the underlying request – the requesting state, the nature of the underlying investigation, the taxpayer involved, the tax period concerned or the applicable foreign tax laws. It was argued on behalf of the companies that this denied them the basic right of procedural fairness and was unfair and unconstitutional.
The BVI Administrative Court found there was at common law a duty of procedural fairness to which public bodies like the ITA are subject, particularly when exercising functions with a power of compulsion. This required that the ITA furnish the companies with sufficient information to enable them to determine whether the Notices were lawfully issued or were liable to challenge and susceptible to being quashed.
In agreeing with the companies’ submissions, Ellis J. expressly rejected the ITA’s argument that the duty of confidentiality to which they it is subject prevails over common law rights of procedural fairness. He made an order of mandamus requiring that the ITA disclose to the companies sufficient information about the request to enable them to assess whether or not the requests were valid.