Drafting prospectus tax sections

Tax disclosure sections in prospectuses are usually based heavily upon precedent, resulting in a gradual accretion of detailed information for investors who are always exhorted by the preamble to seek independent advice. The regulatory requirements of such sections by no means prescribe the level of detail that is often set out. Whilst there can be cost benefits in cutting and pasting from precedent, as well as the sense of safety in numbers, a quick glance at most tax disclosure sections reveals statements that are unnecessary, sometimes unhelpful and occasionally misleading.