Tax Due Diligence

It is fair to say that all transactions require some degree of tax analysis. Whether this takes the form of tax planning or tax due diligence, engaging with tax specialists at an early stage will allow you to factor in tax risks at the negotiation phase.

Not only can our transaction tax specialists help you to assess and quantify current tax risk as a result of previous transactions, but they can identify opportunities to maximise tax efficiencies going forward. With a joined up global network of experienced advisers offering a consistent approach, our tax experts can advise on even the most complex of multinational transactions.

Our tax transaction specialists have vast expertise in all areas of tax, including corporation tax, VAT, customs and games duties, employment taxes and stamp taxes. The focus of tax due diligence is on historical compliance and the identifying and quantifying tax exposures. Typically, the areas to be covered as part of a tax due diligence include:

  • Tax compliance: an assessment of whether the target is up to date with filings and payments across all areas of tax. Our experts would also review the tax filings to provide assurance that they are compliant with legislation.
  • Reorganisations: a review of previous group / company reorganisations or other material transactions, to identify historical risks or potential future tax costs. Equally, our teams review proposed pre-sale transactions to identify any potential tax exposure or risk.
  • Share schemes: our experience tells us that share based payments are often an area of high tax risk, and therefore we would review any share schemes in place to determine whether the correct tax treatment has been applied and whether there is any tax exposure on completion or going forward.
  • Employment taxes: the status of self-employed contractors is an area where we often identify issues, therefore, where relevant, we would review contracts for such individuals.
  • VAT: our experts review VAT compliance, including transaction listings, partial exemption calculations, application of option to tax and the capital good scheme.
  • Group charges: transfer pricing and thin capitalisation can be areas of significant tax exposure, therefore our team of dedicated transfer pricing specialists are on hand to identify the risks and quantify any potential tax liabilities.

Tax structuring

In parallel with tax due diligence work, it is important to consider how the acquisition is to be made and to ensure that this is done in the most tax efficient manner to suit your commercial requirements. Our experts can help you to design an acquisition structure that will meet your needs. For example:

  • Minimising your future tax costs;
  • Designing a tax efficient borrowing structure to finance the acquisition;
  • Enabling tax efficient cash repatriation (both to facilitate repayment of deal related borrowings or otherwise to remit cash to the purchaser);
  • Facilitating a future exit (or partial exit) on a tax efficient basis; and
  • Providing a structure which caters for the future tax efficient expansion of the group (e.g. via bolt-on acquisitions).

We have teams located around the world who work together to ensure that any tax structuring is suitable and efficient not just for the UK but for other locations where you may be based.

Return back to our main page for more of our Due Diligence services offerings.

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