5“IHT Liability”
1.2.4
“IHT Liability” means:
(i) any amount of inheritance tax in respect of which, as at Completion, HM Revenue & Customs or any other person has a charge on or a power to sell, mortgage or charge any of the Shares or assets of the Company; or any amount of inheritance tax for which the Company becomes primarily or secondarily liable after Completion as a result of the death of any person within seven years of a transfer of value, or deemed transfer of value if a charge on or power to sell, mortgage or charge any such shares or assets existed at Completion or would, if the death had occurred immediately before Completion and the Inheritance Tax payable as a result thereof had not been paid, have existed at Completion; (iii) and in determining for the purposes of this Deed whether a charge on or power to sell, mortgage or charge any of the Shares or assets of the Company exists at any time the fact that any inheritance tax is not yet payable or may be paid by instalments shall be disregarded and such inheritance tax shall be treated as becoming due and a charge or power to sell, mortgage or charge as arising, on the date of the transfer of value or other date or event on or in respect of which it becomes payable or arises and the provisions of section 213 of the Inheritance Tax Act 1984 shall not apply. 5.2 The above clause is probably too widely drawn as it does not refer to any amount that the Company or its shareholders may be obliged to pay. An alternative wording is to refer to any reduction in the value of the net assets of the Company as a result of any amount of inheritance tax. This then limits this clause to circumstances in which the Buyer understandably needs protection. 5.2 The above clause does not give any protection to the Buyer in respect of transfers of value by the Company before Completion, as illustrated in the previous example of Great Ashfield Properties Limited. This can be achieved by adding a third sub clause referring to any transfers of value on or before Completion which decreased the value of the Company. (ii) 5.1 The various issues and concerns that the Buyer has in connection with Inheritance Act are explained in Chapter 4.
5.3 Section 213, IHTA 1984 provides that any person who has to refund Inheritance Tax may do so by instalments, if the person who paid the tax could elect to pay by
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