Tax considerations for M&A deals: due diligence and structuring

Tax considerations for any M&A deal start with due diligence: a process of scope question and validate. The scoping and level of detail is increasingly influenced by the requirements of warranty and indemnity insurers as well as the buyer’s needs. A modern tax due diligence exercise will go beyond the usual ‘corporation tax VAT and payroll taxes’ and may consider for instance customs duty the coronavirus job retention scheme and the UK national minimum wage regulations. Tax risks may arise from the off-payroll working rules while the taxation of employment related securities is another significant issue especially for private equity backed deals. A key point for due diligence is identifying issues that impact ongoing annual EBITDA. The due diligence findings will shape the structuring although those two workstreams often run in parallel. In many cases the biggest driver is the...