The buy side tax due diligence flagged a concern over residence risk with a quantum of £3m but due to the limit requested the W&I policy providers would not wrap the risk into the W&I policy. 

The target was incorporated in the UK, however, since the seller acquired the target in 2020, the target had two Canadian resident directors on the board and one UK resident director. There were no board meetings during this time due to COVID but a number of written resolutions were approved by the Canadian resident directors in Canada. There was therefore a risk the target would be deemed tax resident in Canada. 

An insurance policy was issued in the name of the target. Insurance on this point provided certainty for the buyer and removed a contentious deal issue from the table.