CHAPTER SIXTEEN ........................................................................................................ 176 TAX RETURNS ............................................................................................................. 176 Executive Summary ....................................................................................................... 176 1 Introduction ........................................................................................................... 177 2 Tax Computations Unsubmitted at Completion...................................................... 177 3 Duties of Covenantors Re Computations up to Completion ................................... 178 4 The Tax Computations for the Period Straddling Completion ................................ 179 CHAPTER SEVENTEEN .................................................................................................. 181 COUNTER COVENANT ................................................................................................ 181 Executive Summary ....................................................................................................... 181 1 Introduction ........................................................................................................... 182 2 Section 767A, ICTA............................................................................................... 182 3 Section 767AA, ICTA............................................................................................. 184 4 Section 132, Finance Act 1988.............................................................................. 185 5 Section 139, TCGA 1992....................................................................................... 185 6 Section 189, Taxation of Chargeable Gains Act 1992............................................ 186 7 Section 190, Taxation of Chargeable Gains Act 1992............................................ 187 8 Section 282, TCGA................................................................................................ 188 9 Schedule 28, Finance Act 2000............................................................................. 188 10 Section 43 and Sections 43A to 43D, Valued Added Tax Act 1994 ....................... 189 11 Other Valued Added Tax Contingent Liabilities...................................................... 190 12 Stamp Duty: Section 111 and Schedule 34, Finance Act 2002 - Withdrawal of Group Relief.................................................................................... 190 13 Stamp Duty: Section 113, and Schedule 35, Finance Act 2002 - Withdrawal of Relief For Company Acquisitions .................................................... 192 14 Inclusion of Other Seller Protections...................................................................... 192 15 Exclusion to Counter-Covenant ............................................................................. 193 16 Discharge of Tax ................................................................................................... 194 17 The Tax Treatment of Payments under the Counter-Covenant.............................. 194 CHAPTER EIGHTEEN ..................................................................................................... 195 1 Introduction ........................................................................................................... 195 2 Treatment of Payments ......................................................................................... 195 3 De Minimis Clauses, Ceilings and Other Limitations.............................................. 196 4 Treatment of Stub Period....................................................................................... 196 CHAPTER NINETEEN ...................................................................................................... 198 A NEW APPROACH TO TAX COVENANTS: THE REDUCTION IN NET ASSETS AS THE MEASURE OF LOSS: TRANSACTION BASED ON COMPLETION ACCOUNTS ............................................ 198 Executive Summary ....................................................................................................... 198 1 Introduction ........................................................................................................... 200 2 The “Net Asset Reduction” Tax Covenant, assuming Completion Accounts .......... 201 3 The New Format Tax Covenant In Practice ........................................................... 217
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