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GLOSSARY

Gross-up definition

Published by a LexisNexis Banking & Finance expert

What does Gross-up mean?

The requirement for a borrower to make additional payments to a lender/investor to compensate for withholding tax or other deductions which would otherwise reduce the amount actually received by the lender/investor.

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Terms and conditions—first time issuer's negotiation checklist

Terms and conditions—first time issuer's negotiation checklist What this checklist covers This checklist outlines the key points that a lawyer advising a first time issuer should check and, if necessary, seek to amend when reviewing English law terms and conditions for an issue of debt securities. This checklist contains material relevant to: • secured and unsecured debt securities • debt securities constituted by a trust deed, and • debt securities issued without trust deeds, such as: ◦ debt securities issued under a fiscal agency structure—for information on fiscal agents, see Practice Note: Role of a fiscal agent, and ◦ debt securities constituted by an instrument executed by the issuer (and guarantor, if applicable) without a trustee, of the kind used in issues of mini-bonds (a bond instrument) This checklist should be read together with Practice Note: Terms and conditions—first time issuer's guide, which: • explains the practical aspects of the key individual provisions (conditions) usually found in the terms and conditions of debt securities • compares them with the...

Outsourcing and tax—checklist

Outsourcing and tax—checklist There are no specific laws, including tax laws, applicable to outsourcing arrangements and no technical legal meaning of the term. Consequently, each outsourcing arrangement will be specific to its own particular facts and will raise a different mix of tax issues. This Checklist sets out the headline tax issues that should be considered in relation to a contractual outsourcing. For the purposes of this Checklist, it is assumed that: • the contractual outsourcing arrangement is a direct supply of services from a third-party service provider to a customer • both the supplier and the customer are corporate entities, and • both the supplier and the customer are resident in the UK, other than in the final section on cross-border tax issues The Checklist is split into the following three sections: • setting up outsourcing arrangements • operating outsourcing arrangements, and • cross-border outsourcing arrangements This Checklist should be read in conjunction with the following Practice Notes: • Outsourcing—general tax issues, and • Outsourcing...

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Finance party default—lenders

Finance party default—lenders It isn’t only borrowers that can get into financial difficulties. Failure by a lender to meet its lending commitments under a loan agreement could have severe implications for the borrower, who may not be able to meet its own financial commitments. It is also likely to have knock on effects for other lenders who may find the borrower’s ability to make repayments is impacted. The Loan Market Association’s (LMA) recommended form of senior multicurrency term and revolving facilities agreement (compounded rate/term rate) for leveraged acquisition finance transactions (LMA leveraged facilities agreement), and the other LMA leveraged finance facilities agreements, contain provisions to help counteract some of the potential problems that may arise on syndicated facilities in the event that a finance party is at risk of not meeting its obligations. While the LMA recommended forms of investment grade documentation do not include the provisions, parties may decide to include them in other syndicated facility agreements. The standard form documentation is available to LMA members on the...

Scope of the ISDA Master Agreement—Section 5 (Events of Default and Termination Events)

Scope of the ISDA Master Agreement—Section 5 (Events of Default and Termination Events) ISDA documents The 1992 and 2002 ISDA Master Agreements (the Master Agreement) are standard form documents produced by the International Swaps and Derivatives Association (ISDA). In this Practice Note, references to Sections of a Master Agreement and Parts of a Schedule are references to the 2002 ISDA Master Agreement and Schedule unless otherwise stated. For general information about negotiating ISDA Master Agreements, see Practice Note: Introduction to negotiating ISDA documents. What are Events of Default and Termination Events? Section 5 (Events of Default and Termination Events) of the Master Agreement, is divided into two sections: • Section 5(a) (Events of Default) sets out the Events of Default, and • Section 5(b) (Termination Events) sets out the Termination Events Events of Default are events which give one party the right to terminate any outstanding Transactions under an ISDA Master Agreement. A decision to declare an event an Event of Default will...

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Tax wording for assignment

Withholding taxes Assignor-friendly—gross-up clause 1 Any sum payable under this [agreement] shall be paid free and clear of any deduction or withholding in respect of any tax whatsoever, save only as may be required by law. If any deduction or withholding is required, the assignee shall promptly provide the assignor with such certificates or other documents as it can

Guarantee and indemnity: single company guarantor—bilateral—all monies

Guarantee and indemnity: single company guarantor—bilateral—all monies This Deed of guarantee and indemnity is made on [insert day and month] 20[insert year] Parties 1 [Insert name of Guarantor], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address] (the Guarantor); and 2 [Insert name of Lender], of [insert address] (the Lender). BACKGROUND (A) The Lender has provided facilities to the Company (as defined below) under various financing arrangements. (B) It is a condition of the Lender making the facilities available to the Company that the Guarantor enter into this Deed in favour of the Lender. It is agreed as follows: 1 Definitions and interpretation 1.1 Definitions In this Deed[, unless otherwise provided]: Business Day • means a day, other than a Saturday, Sunday or public holiday on which banks are open for business in London; Company • means [insert name of the borrower company to whom the Lender is making financing facilities available], a...

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Where a Will declares that a property passes 'subject to tax' and will carry its own IHT liability and where the estate as a whole is taxable, how is the total IHT liability apportioned between the value of the property and the rest of the estate?

Where a Will declares that a property passes 'subject to tax' and will carry its own IHT liability and where the estate as a whole is taxable, how is the total IHT liability apportioned between the value of the property and the rest of the estate? Section 211 of the Inheritance Tax Act 1984 (IHTA 1984) provides that the general position is that liability to inheritance tax (IHT) on a deceased estate falls to be treated as a testamentary expense payable from the residue of the estate. However, this is subject to a contrary intention being shown by the testator, such as in the case where the testator leaves an asset 'subject to tax'. Where a particular asset is stated in the Will to pass subject to IHT, then it will be necessary to apportion the total IHT charge on the estate between that particular asset, any other specific gifts and the residue of the estate. When calculating the IHT due on a deceased’s estate, it is necessary to consider...

What is the impact of a potential Brexit on the tax drafting in loan agreements?

What is the impact of a potential Brexit on the tax drafting in loan agreements? None, provided the loan agreement is in Loan Market Association (LMA) standard form. The tax gross-up and indemnity clauses (and their accompanying definitions) are based in UK domestic and international treaty law, not EU law, so Brexit should have no effect on them. The stamp taxes clause (based on UK domestic law) and FATCA clause (grounded in US law and the UK/US inter-governmental agreement as reflected through UK domestic law) are similarly unaffected. While VAT is an EU formulated tax, and one might therefore expect the VAT clause to be impacted, this should not be the case. It is highly unlikely that the UK will get rid of VAT once Brexit is effected (it is one of the UK’s key tax revenue generators), and while some changes to the UK domestic rules may be made in due course these should not affect standard VAT clauses. It is however important to check...

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Tax weekly highlights—19 June 2025

This week's edition of Tax weekly highlights includes: (1) News Analyses on the FTT decisions in Eastern Power Networks, Moffat and Performance Leads, (2) HMRC’s new guidance on cost contribution agreements under the advance pricing agreement programme, (3) HMRC’s direction extending the deadline for making a final VAT return, and (4) HM Treasury’s policy paper on ‘Tax policy making principles’.

Banking and Finance weekly highlights—20 August 2020

This week's edition of Banking and Finance weekly highlights includes: (1) the All-Party Parliamentary Group on Fair Business Banking discusses banks’ payment holiday support for business customers, (2) the Law Society responds to the HM Land Registry’s draft practice guidance on electronic signatures, and (3) the Climate Financial Risk Forum discusses strategy for year ahead.

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