Hugo Webb explains why IHT can be an unexpected issue for the buyer in the context of a share sale, and what can be done about it
Tax covenants in share salesA tax covenant provided by the seller to the buyer is a common feature in most sales of private companies.
The general purpose of a tax covenant is to provide the buyer with protection against tax liabilities of the target company that are unforeseen or not provided for in the accounts or completion accounts usually by reference to ‘events’ that occurred before completion.
Usually a tax covenant will contain a general indemnity for tax liabilities of the target company that arise in consequence of any ‘event’...
