A private equity fund were buying a portfolio of student accommodation located in various cities across the UK. Both the vendor due diligence and buy side tax analysis flagged a concern over residence risk with a quantum in excess of £50m.

The buyer was concerned that due to the major shareholder and executive director of the target business having dialled in to board meetings from multiple countries over a 5 year period, that the Jersey target was in fact dual resident in one or more countries.

An insurance policy was issued in the name of the target with the buyer as a beneficiary for a limit of £50m which could be applied in the event a tax authority in 5 countries raised a challenge. Insurance on this point provided certainty for the buyer and removed a contentious deal issue from the table. In taking the insurance the buyer also obtained protection against any seller fraud/non-disclosure in relation to the residency of the company.