Helen Coward (Charles Russell Speechlys) reviews a recent High Court case on the meaning of a gross-up clause in a share purchase agreement.
In a share purchase agreement (SPA) the tax gross-up usually comprises two separate clauses: the first provides for the paying party to add an additional amount onto a payment from which withholding is required and the second deals with circumstances where the recipient pays tax on the amount received.
The judgment in AXA v Genworth [2020] EWHC 2024 (Comm) considers the interpretation of an example of the second type of clause. The claimant (AXA) sought to recover under an SPA just short of £500m of alleged losses as a result of the mis-selling of payment protection insurance together with corporation tax at 19% (or alternatively 32.023% in French tax liabilities) under the gross-up clause in the SPA.
Positions taken by the parties
The...
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Helen Coward (Charles Russell Speechlys) reviews a recent High Court case on the meaning of a gross-up clause in a share purchase agreement.
In a share purchase agreement (SPA) the tax gross-up usually comprises two separate clauses: the first provides for the paying party to add an additional amount onto a payment from which withholding is required and the second deals with circumstances where the recipient pays tax on the amount received.
The judgment in AXA v Genworth [2020] EWHC 2024 (Comm) considers the interpretation of an example of the second type of clause. The claimant (AXA) sought to recover under an SPA just short of £500m of alleged losses as a result of the mis-selling of payment protection insurance together with corporation tax at 19% (or alternatively 32.023% in French tax liabilities) under the gross-up clause in the SPA.
Positions taken by the parties
The...
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