2 Part Course  | 
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Tax Issues in Indemnities, Covenants & Warranties

2 Part Course  |  A practical analysis of issues when drafting tax indemnities / schedules / covenants from both the point of view of the buyer and the seller and the consequent conflicts that can arise

Green and Red leaves a contrast of color that is both vibrant and calming

A one-day course presented over two-half days in a virtual class from 9:30am to 1:00pm UK time

Part One

The rationale behind the tax indemnity / schedule / covenant

Interpretation issues: the approach of the courts

  • Drachs investments No 3 Ltd v Brightsea [2011] EWHC 1306 (Comm) High Court
  • Brightsea UK Ltd v Drachs Investments No. 3 Ltd [2012] EWCA Civ 516
    • Not a price adjustment clause

Interpretation issues: definitions (including)

  • Accounts
  • Event
    • Combined events
  • Reliefs
    • Accounts reliefs
    • Buyer’s reliefs
    • Sellers’ reliefs
  • Tax Liability
    • Actual
    • Deemed
  • Straddle Period
    • RIG Holdings LP v Aeroflex Test Solutions Ltd [2009] STC 2521
  • Overprovisions

The Indemnity/covenant

  • Allocation of risk
    • Completion Balance Sheet
    • Accounts
    • Locked Box
  • Pound for pound recovery compared to damages under the warranties.
  • Liabilities covered (including)
    • Actual tax liabilities
    • Secondary tax liabilities
    • Previous tax covenant
    • Deemed tax liabilities
    • Liabilities from Employment Related Securities
    • Disguised remuneration
    • Specific indemnities
    • Costs and expenses

Part Two

Protecting the seller

  • Exclusions from liability (including)
    • Provision or reserve in the accounts (accounts and locked box)
    • Change in rates of tax or legislation
    • Voluntary acts of the buyer
    • Withdrawal of claim or surrender
    • Change in accounting policies
    • Failure to make an election
    • Availability of seller’s relief (mitigation).
    • Change in the nature of conduct of the trade
    • Entered into at the written request of the purchaser
    • Stamp duty and SDRT on transaction documents
    • Made good or compensated by insurers
  • Time limits
    • Kuoni Travel Ltd v J Boyle & ors [2013] EWHC 877 (QB)

Other relevant cases

  • Stobart Group v Stobart & Tinkler [2019] EWCA (Civ) 1376
  • Towergate Financial (Group) Ltd v Hopkinson [2020] EWHC 984 (Comm)
  • Dodika Ltd v United Luck Group Holdings Ltd [2020] EWHC 2101 (Comm)

Date for payment

  • Actual tax
  • Deemed tax

Gross up clauses

Administrative matters

  • Pre-completion tax affairs: schedule or SPA?
  • Conduct of negotiations



Our trainer advises on all areas of revenue law, both corporate and personal, but has a particular interest in corporate tax matters including, acquisitions and disposals, reconstructions and demergers, MBOs, returning capital to shareholders, s425 schemes, SDLT, stamp duty and SDRT.

He has a special expertise in the taxation of insolvent companies, members' voluntary liquidations (including s110 schemes) and bankruptcy, and lectures regularly to R3 and is a member of the R3/HMRC liaison group which meet regularly to discuss issues of conflict between insolvency law and tax law.  Over the years he has been involved in advising on the tax aspects of some of the UK's major insolvencies including Maxwell, Pollypeck, BCCI, Olympia and York, Mayflower, ITVdigital, MFI, Allied Carpets, Borders, Farepak and Lehman Bros.  He is a Fellow of the Association of Business Recovery Professionals (FABRP) having passed the JIEB examinations.

 Following his call to the bar by Middle Temple in 1986 and pupillage in insolvency chambers (3/4 South Square) where he was pupil to the late Gabriel Moss QC and tax chambers (Pump Court) he joined Paisner & Co (now Bryan Cave Leighton Paisner) before moving on to Allen & Overy.  In 1993 he joined Coopers & Lybrand (now PwC) and then in 1996 Deloitte, where he was made a corporate tax partner in 1999.

In 2008, fearing he would be found dead in his hutch under a pile of budgets, appraisals and forecasts he returned to the Bar and joined Temple Tax Chambers.

The course will explain to delegates:

  • The key tax and risk issues affecting the different approaches of the purchaser and seller.
  • The relevance of the clauses in a typical tax indemnity/schedule/covenant.
  • The approach of the courts to the interpretation of tax indemnities/schedules/covenants.
  • The interaction of clauses in the SPA with those in the tax indemnity/schedule/covenant and potential areas for conflict.
  • The common issues with the warranties and disclosure.

  • The trainer is a barrister with over 35 years’ experience in tax who has been involved in negotiating tax indemnities/schedules/covenants and has written extensively on the subject.
  • The course covers the tax indemnity/schedule/covenant from the point of view of both the purchaser and seller highlighting the key differences in approach.
  • There are many examples of the clauses to be found in the typical tax indemnity/schedule/covenant.

The course provides a practical analysis of the issues that arise when drafting tax indemnities / schedules /covenants from both the point of view of the buyer and the seller and the consequent conflicts that can arise.  Where these have been the subject of litigation the relevant cases are discussed.

The course includes examples of the different clauses, what they are intended to achieve and how they aim to achieve it.

It also looks in outline at the impact of warranty and indemnity insurance on the drafting of the tax indemnity/schedule/covenant and the modifications that need to be made as a result.

Finally, it looks at some issues arising on the drafting of tax warranties and issues arising on disclosure.

Number of places:
Part 1

£ 695.00

Number of places:
Part 2

£ 695.00

Discounts available:
Virtual Class

  • 2 places at 30% less
  • 3 places at 40% less
  • 4 places at 50% less
  • 5 places at 55% less
  • 6+ places at 60% less
  • Select the number of course places and dates to automatically calculate the discount
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