Tax warranties
Statements about the company's tax history and compliance. We make sure they're accurate, and that anything that isn't is properly disclosed.
Tax warranties and indemnities
Don't let the sale agreement give back what the deal gave you.
The sale agreement decides who pays for tax problems that surface after completion. For sellers, poorly negotiated tax protections can mean years of exposure and money held back. For buyers, weak protections can mean inheriting someone else's tax bill. We make sure the tax terms are fair, clear and reflect what's actually known about the business.
What we review and negotiate
The tax covenant or tax deed
The seller's promise to pay for tax relating to the period before completion. We negotiate its scope and the exclusions that should apply.
Limits on claims
- Time limits for bringing claims.
- An overall cap on the seller's liability.
- Minimum thresholds below which claims can't be made.
- How claims are conducted and settled with HMRC.
Retentions, escrow and insurance
How much of the price, if any, is held back to cover tax risks, and whether warranty and indemnity insurance could offer a cleaner alternative.
For sellers and buyers
Sellers: we limit your exposure after completion, make sure disclosures protect you, and push back on protections that are wider than the risks justify.
Buyers: we make sure the protections match the risks found in tax due diligence, and that specific known issues are covered by specific indemnities.
How we help
- Reviewing the tax sections of heads of terms and the sale agreement.
- Preparing or reviewing the disclosure letter.
- Negotiating directly with the other side's advisers, alongside your lawyers.
- Advising on claims if issues arise after completion.
Proof
[CASE STUDY: e.g. tax exposure negotiated down for a seller]
FAQs
Frequently asked questions
What's the difference between a tax warranty and a tax indemnity?
A tax warranty is a statement of fact about the company's tax affairs. If it's untrue, the buyer usually has to prove its loss to make a claim. A tax indemnity, often in a separate tax covenant or tax deed, is a promise to pay for specific tax liabilities on a pound-for-pound basis, without the buyer needing to prove loss.
How long do tax claims last after completion?
It's negotiated, but tax claims commonly run for 4 to 7 years after completion, reflecting how long HMRC can typically go back to raise an assessment. Sellers should aim for clear time limits, caps and minimum claim thresholds.
What is warranty and indemnity insurance?
It's insurance, usually bought by the buyer, that covers losses from breaches of warranties and certain indemnities. It's common in private equity deals and can allow sellers a cleaner exit, with less of the sale price held back or at risk.
Related advice
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Read moreBuying a Business
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Reviewing a sale agreement?
Bring us in before the tax terms are agreed. Book a call.
Or write to taxadvisory@aswatax.co.uk
Last reviewed 4 October 2026
