the period into which losses can be carried back is extended by the length of the stub period.
9.10 It may also be helpful to include a statement to the effect that the adequacy of provisions in the Last Accounts are to be considered on the basis that the Last Accounts Date remains the accounting reference date regardless of whether or not the accounting period is extended after Completion. 9.11 We cannot identify circumstances in which a change of accounting reference date of the Buyer should impact on the Tax Liabilities and we question the reason for this part of this exclusion.
10 Voluntary Act of Buyer or Company after Completion
3.1.9 such Tax Liability arises or is increased by a voluntary act or transaction of the Company or the Buyer after Completion, which the Buyer knew, or should reasonably have known, would give rise to, or increase, the Tax Liability in question and which was carried out without the consent in writing of the Covenantors, but excluding any act or transaction:
(a)
required by law; or
(b)
carried out as a result of an obligation of the Company entered into before Completion; or
(c)
carried out with the written consent of the Sellers; or
(d)
carried out in the ordinary course of the business of the Company or the Buyer .
10.1 This is a largely self-explanatory exclusion: the covenantors should not be liable under the deed if the actions of the Buyer or the Company after Completion lead to the additional cost. 10.2 There is a condition to the exclusion relating to the knowledge of the Buyer: by way of example, if there had been a company purchase of own shares out of capital, sometime prior to Completion, this could then result in a tax liability being triggered after Completion if the Company issued bonus shares to the Buyer. 10.3 Under the above example there is then an argument to be had as to whether or not it was the issue of the bonus shares, after Completion, or the purchase of own shares, before Completion, which was the trigger to the tax liability.
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