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 had not been paid, would have existed at Completion; or
(iii) which arises as a result of a transfer of value occurring on or before Completion, which increased or decreased the value of the Company 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; 1.2.6 “ Overprovision ” means the net amount by which the liabilities included in the Completion Accounts relating to Tax (including provisions for Deferred Tax) are greater than the Accounts Value of the Tax liabilities, and also means the extent to which any amounts paid under the Corporation Tax (Instalment Payments) Regulations 1998 are in excess of the Accounts Value of the Tax liability, except in each case to the extent that the Overprovision results from either the utilisation of a Post-Completion Relief, Buyer’s Group Relief or a change in rates of taxation or any change in tax law or practice, in each case with retrospective effect. This definition normally excludes provisions for Deferred Tax. However, as the Deferred Tax provision is being included within the protection of the tax covenant, it is appropriate that any Overprovision for Deferred Tax should be treated in the same way as other Overprovisions. The wording is also expressed in net terms so as to address the prospect of an underprovision for corporation tax being matched by an overprovision for deferred tax. It is arguable that there is no need to refer to utilisation of Buyer’s Reliefs or retrospective changes as these would not have impacted on the Accounts Value as they do not affect the measurement of assets and liabilities at Completion. 1.2.7 “ Overstatement ” means the net amount by which the assets in respect of Taxation (including in respect of deferred tax) included in the Completion Accounts are greater than the Accounts Value of the Reliefs available to the Company except in each case to the extent that the Overstatement results from a change in rates of taxation or any change in tax law or practice, in each case with retrospective effect; The protection for the Buyer in respect of Overstatements was previously provided in two separate components, namely the loss of a Deferred Tax Relief or of an Accounts Relief. It is now simpler to refer to the definition of Tax Cost as including any Overstatement or Underprovision.
Made with FlippingBook Learn more on our blog