The seller of a target was looking to clear a number of intra-group loan balances prior to the sale of the target.

A risk was flagged in the buy-side DD of a potential UK corporation tax risk arising in respect of the waiver of a number of intra-group loans at completion of the sale of the target.

An insurance policy was issued for the buyer who would have inherited the risk by completing the acquisition of the target. All advisors perceived the risk to be low but both the buyer and seller wanted certainty to prevent an unexpected liability arising at completion.