The dispute in AXA SA v Genworth Financial International Holdings LLC and others [2020] EWHC 2024 (Comm) (27 July) concerned a fairly standard clause providing for a gross-up for tax in hand in respect of a payment made under a share purchase agreement (SPA) (in this case a payment from the seller to indemnify the buyer for 90% of any liabilities relating to the mis-selling of payment protection insurance (PPI) by the acquired companies). The High Court held that the words ‘subject to taxation in the hands of the receiving party’ in that clause means ‘actually taxed in the hands of the receiving party’.
The court also held that the additional payment to gross up for the tax in hand only becomes due when the receiving party is under an enforceable obligation to pay an actual amount of tax.
The court came to this conclusion by interpreting the relevant gross-up...
