11 “Tax Authority”....................................................................................................... 111 12 “Tax Claim”............................................................................................................ 112 13 “Tax Liability” ......................................................................................................... 112 14 “Understatement” .................................................................................................. 113 15 In the Ordinary Course of Business ....................................................................... 114
CHAPTER NINE ............................................................................................................... 118 THE COVENANTS ........................................................................................................ 118 Executive Summary ....................................................................................................... 118 1 Introduction ........................................................................................................... 119 2 The Main Covenant ............................................................................................... 120 3 Post Completion Liabilities..................................................................................... 121 4 Tax Related to Share Options ............................................................................... 122 5 Stamp Duty ........................................................................................................... 123 6 IHT Liabilities......................................................................................................... 123 7 Post-Completion Event .......................................................................................... 123 8 Costs ............................................................................................................... 124 9 Other Matters ........................................................................................................ 124 CHAPTER TEN ................................................................................................................ 126 THE EXCLUSIONS AND LIMITATIONS ....................................................................... 126 Executive Summary ....................................................................................................... 126 1 Introduction ........................................................................................................... 127 2 Provision for Tax in the Relevant Accounts ........................................................... 127 3 Transactions Between the Last Accounts Date and Completion ............................ 129 4 No Loss from Transaction Outside the Normal Course of Business....................... 131 5 Increase in Tax Rates with Retrospective Effect.................................................... 132 6 Retrospective Changes in Legislation.................................................................... 132 7 Changes to Published Practices or Procedures..................................................... 132 8 Change in Accounting Policy or Practice ............................................................... 133 9 Change in Accounting Reference Period ............................................................... 135 10 Voluntary Act of Buyer or Company after Completion............................................ 137 11 Disclaimer of Capital Allowances........................................................................... 138 12 Mitigation............................................................................................................... 138 13 Failure to make Elections ...................................................................................... 138 14 Failure by the Buyer to Comply ............................................................................. 139 15 Use of a Relief which is not a Buyer’s Relief.......................................................... 140 16 Impact of Joining Buyer’s Group............................................................................ 140 17 Cessation or Diminution or Change of Trade ......................................................... 141 18 Failure to Make Payment to HMRC or to Retain Records ...................................... 141 19 Stamp Duty Payable on Transaction ..................................................................... 142 20 No Double Claim ................................................................................................... 142 21 A Recovery Is Made From a Third Party................................................................ 142 22 Tax Already Paid or Cleared.................................................................................. 143 23 Timing Differences – Unmatched........................................................................... 144 24 Timing Differences - Loss of Buyer’s Deferred Tax Relief...................................... 146 25 Time Limits............................................................................................................ 147 26 Limitations Imported From Agreement................................................................... 147 27 Statutory Rights..................................................................................................... 147
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