TAX LIABILITY
INSURANCE
Whether a known potential tax liability has been identified during due diligence, or an uncertainty in the application of tax law that a client requires protection against, we can work with you to provide the security you need using tax liability insurance.
Products can be tailored to enable a seller, a fund, or a liquidator to release monies that are otherwise tied up in escrow arrangements, or protect a buyer concerned about the financial covenant of individual sellers, giving them the protection they need to complete a transaction.
Tax liability insurance can work in conjunction with, or separately from Warranty & Indemnity insurance. It can be used by corporates or individuals protecting themselves against future potential tax charges bought about by financial transactions.
TAX LIABILITY
INSURANCE
SCOPE OF COVERAGE INCLUDES:
Loss arising from a specific known tax issue (as defined in a bespoke tax policy)
Loss arising from any applicable interest and penalties charged by a tax authority
Defence costs
Seller fraud (for Buyer policies)
Liability period of up to 7 years
WHY CONSIDER TAX LIABILITY INSURANCE?
Where due diligence uncovers a known tax issue
Where uncertainty or complexity in tax law enables neither party to conclude as to how it should apply to a transaction or series of transactions
Anti-avoidance legislation and/or broadly drafted tax Provisions
Uncertainty following a landmark case
To enable a Seller to have a clean exit after disposal of a business and distribute proceeds, as an alternative to escrow or hold-back
To enable a fund or trust to be wound up
To protect a liquidator against ongoing personal liabilities following a winding up
To satisfy a buyer’s lenders
Where a buyer is not satisfied with the financial covenant of the seller or the jurisdiction for enforcement of claims