The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
A tax practitioner is most likely to become involved in due diligence in reviewing the target’s tax position on behalf of the purchaser.
The overall aim is to provide a report to management, highlighting key areas of risk and suggesting what actions could be taken by management to mitigate these risks. This process is also often required by the banks and other finance providers to give some comfort that the investment being made is sound prior to funds being advanced to the acquiring group. As part of due diligence process detailed checks will be made concerning the legal, commercial, financial and tax history of the target company or group, depending upon the requirements of the management team.
The main due diligence report usually covers:
analysis of the financial position
analysis of the forecast results
details of the customer base, value and terms of key contracts
details of the management team
review of costs, ie staff, premises, etc
review of the tax position of the companies being acquired
asset review, ie identification of intellectual property and details of any protection, eg patents, registered designs, etc
purchasing and supply chain information
suitability of operating and IT systems
Due diligence is usually carried out by accountants, who may be part of a specialist corporate finance transaction support team. The work will involve close liaison with other professional advisers, eg lawyers, etc involved in drafting the sale and purchase agreement and other documentation.
Depending on the type of business carried on by the target, it may be necessary for the purchasing company to engage with a specialist adviser to carry out commercial due diligence. Specialist knowledge may be required for example in relation to:
pharmaceutical / life sciences
oil / gas
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