24.5 If the payment profile for the loss of Deferred Tax Reliefs is based on the actual profits made after Completion, then both sides have a similar problem in dealing with what happens at the end of seven years if these Reliefs would not have been utilised.
25 Time Limits
3.2 T he Covenantors shall have no liability in respect of any claim under this Deed unless notice of such claim shall have been served upon the Covenantors by the Buyer by no later than the seventh anniversary of Completion, unless the claim in question has arisen by reason of fraud on the part of the Covenantors, or prior to the Completion Date, on the part of the Company or any officer or representative of the Company, in which event there shall be no contractual limit on the time period within which such claim may be brought The Covenantors shall have no liability in respect of such claim if proceedings have not been commenced within twelve months of the service of such notice;
25.1 A seven year period for claims under the tax covenant, and also the tax warranties, is now virtually standard practice.
25.2 The extension of the limit in cases involving fraud should not reasonably extend beyond 21 or 22 years. We therefore consider that the above drafting should be varied in that respect.
26 Limitations Imported From Agreement
3.3 P aragraph 2.1 (Limitation on the liability of the Warrantors under the Warranties) of Schedule 5 to the Agreement shall have effect as if incorporated into this Deed mutatis mutandis with any modifications that may be necessary;
26.1 The sorts of limitations that will be included in the Agreement will be an overall ceiling on claims, normally set at the Consideration payable, and different forms of de minimis.
26.2 It appears to be increasingly recognised that the de minimis clauses should have effect for the tax covenant: there is little logic in not being able to pursue smaller claims under the warranties, but having the power to require payment under the tax covenant, with no lower level of cut-off.
27 Statutory Rights
3.4 t he Buyer shall not enforce any statutory right of recovery against the Covenantors in respect of a Tax Liability to the extent that the Buyer or the Company has already made a recovery in respect of that liability under this tax covenant;
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