The due diligence undertaken by the buyers of some real estate pointed at a potential VAT exposure bought about by the historic use of the Golden Brick, a scheme which allows a developer to recover any development costs expended on VAT.
Owing to doubt over whether the scheme had been followed correctly, the possibility of HMRC reclaiming the VAT in the future could not be ruled out.
A tax liability policy was taken out by the buyers (but paid for by the sellers) which covered the calculated VAT exposure, interest and defence costs. The real estate was bought at market value and without further delay.