Tax due diligence is likely to be conducted during transactions such as disposals, mergers, or refinancing. Failure to address any tax issues before the due diligence process can cause significant delays and renegotiation of the price. A review before a planned transaction can identify tax assets and issues that need to be dealt with.
Common tax issues in tech and media businesses include share schemes, off payroll workers, export VAT evidence, director’s loans, and overseas operations. It is essential to assess and document the status of off-payroll workers, have robust export evidence procedures in place, and understand the reason for any intra-group balances. Overseas operations may require US tax advice due to the complexity of US sales tax.