Tax Due Diligence
The scope of tax due diligence encompasses reviewing the target company’s tax affairs over several years, focusing on tax returns, liabilities, compliance with regulations, and communications with tax authorities like Revenue. Advisors assess deferred tax provisions, VAT treatment, payroll obligations, and compliance with tax obligations under corporate restructuring or incentive schemes. Special attention is paid to areas such as PAYE on employees, VAT on property, and benefits in kind.
The process often begins with questionnaires and document requests, including past Revenue audits, tax returns, and correspondence. Advisors assess potential risks, including misclassification of contractors as employees or improperly claimed VAT inputs. They also evaluate potential clawbacks or liabilities triggered by structural changes or acquisitions.
A comprehensive tax due diligence report summarises findings, risks, and computations, providing clarity on liabilities and informing negotiation of warranties and indemnities. Strategic issues, including acquisition structures and cross-border tax implications, may also require detailed consideration for optimising tax outcomes for the buyer.
Read a detailed Article on this subject with the Legislation and Cases, browse Irish Legal Guide or Contact Us for advice below.