The Deed of Indemnity: legal and tax pointers

Article Abstract:

An analysis of Deeds of Indemnity reveals important legal and tax suggestions related to purchasing or acquiring businesses. Sale/purchase agreements commonly contain warranties and Deeds of Indemnity to limit the financial risks of the parties to the purchase agreement. Warranties are guarantees by the vendor that items are as they have been stated to be, and contain provisions for compensation to the purchaser in the event of a breach of warranty. Deeds of Indemnity are agreements given by the vendor under which they will be indemnified for the full amount of any tax liabilities covered by the deed. The main points of Deeds of Indemnity include: definition of liability on a joint or several basis; the party to be indemnified; and the type of taxation liabilities covered. The Inland Revenue views indemnity payments from the vendor to the purchaser as reducing the vendor's sale proceeds. The majority of indemnities are paid to the vendor, and indemnity payments to vendors are chargeable as capital gains.

Laws, regulations and rules, United Kingdom. Board of Inland Revenue

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Think before you roll over

Article Abstract:

Roll-over tax relief allows businesses to defer payments on the capital gains of a disposed business asset by rolling the capital gain over against a qualifying asset's costs as long as the proceeds are fully reinvested. No tax is paid on the disposal and the proceeds become available for reinvestment. The tax on the gain which has been rolled-over is payable when the replacement asset is sold, and thus provides a form of permanent tax relief. Where replacement assets are depreciating assets, gains are held over rather than deducted until certain events occur. Qualifying assets include goodwill, fixed plant and machinery, and real property used for the purposes of trade.

Accounting, auditing, & bookkeeping, Economic aspects, Business enterprises, Capital gains tax

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Tax issues down on the farm

Article Abstract:

Farmers and their tax advisers should be aware of a number of important developments in government taxation and agricultural policy to maximize capital tax planning. A number of tax issues and their impact on farmers are presented, including choosing an election for global rebasing; halving gains rolled over/held over before April 1988; claiming retirement relief for a sale of part of a farm; and disposing of milk quotas. In addition, the taxation of set aside payments and current capital tax considerations are also presented.

Agriculture

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