Tax insurance is now prevalent in many M&A deals. Tax advisers should consider the implications when determining their approach to tax due diligence and the presentation of diligence findings. The tax due diligence should continue to feed into pricing negotiations where material tax risks are identified which are uninsurable. For the insurable items, the depth of the tax due diligence process and detail of findings presented can make the difference between items being covered or excluded from an insurance policy. Tax advisers involved in the due diligence can therefore play an important role in this process where tax insurance is used on a transaction.
