Tax Warranty Expert Witness UK

Tax warranties in an SPA warrant the tax position of the target company: that all tax returns have been filed and are accurate, that no undisclosed HMRC investigations exist, and that tax computations are correct.

Tax warranty claims require both a forensic accountant to assess the accounting treatment underlying the tax position and a tax technical expert to assess the correct tax analysis. Combined instruction is standard in material tax warranty disputes.

A tax deed of indemnity (or tax covenant) provides pound-for-pound recovery for pre-completion tax liabilities. Unlike a warranty claim which requires proof of diminution in value, the tax deed provides direct recovery of the tax liability itself.

Expert evidence establishes the quantum of the tax liability that triggers the deed, including interest and penalties where applicable. HMRC investigation risk must also be assessed and quantified where a warranty covers undisclosed investigations.