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Markel Tax

01 Oct 2016

Markel Tax launch tax indemnities insurance

What is Tax Indemnity Insurance

Tax Indemnity Insurance is a specialist product designed to indemnify the insured against any additional tax that becomes due following a business sale or restructure.  This insurance is most relevant in mergers and acquisitions where the parties are unable to satisfactorily allocate the tax risks between themselves.  This can result in deadlock so a key selling point of the product is its ability to facilitate the completion of transactions that might otherwise flounder.

By taking out Tax Indemnity Insurance, the insured effectively gains certainty in areas where there is uncertainty in the potential application of tax laws.

What can be covered

Tax Indemnity Insurance is of value:

Where potential liability issues are identified during an acquisition or disposal and the acquirer is concerned about the historic tax position.
  • To protect a Group’s tax position after reorganisation.
  • In Intra group transfer or re-organisations for the resulting CGT liabilities.
  • With payroll tax issues resulting from equity participation by management in an MBO.
  • Where parties are unable to obtain tax authority clearance due to timing or confidentiality issues.

What is the process?

We provide a seamless service throughout the process, reviewing each case and placing the risk with our parent company Markel International.  We insure the ‘tax risk’ and premiums are usually based on a percentage of that risk. As each transaction is unique, premiums are determined case by case on specific risk factors including:
  • The nature of the transaction giving rise to the potential tax issue.
  • The taxpayer’s particular circumstances, representations made and insurance limit required.
  • Relative strength of, and legal basis for, the tax position taken.

We have handled numerous confidential and sensitive enquiries relating to this specialist insurance and, dependent on the circumstances, cover can sometimes be placed even after the transaction has completed.
Tagged Tax indemnity insurance
Next article in series

01 Sep 2016

Markel Tax response on the Public Sector IR35 consultation

Strategic partners

  • Tolleys
  • Institute of Financial Accountants
  • BTC Software
  • Lovell Consulting