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Tax Liability Insurance (Mergers and Acquisitions)

Overview: Provides protection against the unanticipated deficiency in taxes and interest owed to a taxing authority attributable to a transaction.

Cover: Protection against a challenge by the Inland Revenue regarding the tax treatment of a transaction (such as a reorganisation or degrouping

Who is it for?:  Any company considering a merger, acquisition or restructuring.

  • Tax Liability Insurance from AIG UK can reduce or eliminate a loss arising from the successful challenge by the tax authorities of a taxpayer’s tax treatment of a transaction or investment.
  • Highly customised coverage can address
  • • Expenses that might be incurred by the insured in engaging outside legal advisers and/or accountants in order to resolve the dispute with a relevant tax authority;
  • • Interest and insurable fines or penalties as well as additional tax payable if the dispute is lost; and
  • • Gross-up of taxes payable (ie if the taxpayer is found to have an additional tax liability, the insurance proceeds may be deemed taxable: the policy will cover any tax incurred on receiving the proceeds).