Joint Ventures: Applying ESC D33 in Practice
In this article for Tax Journal, Caroline Inker and Ceinwen Rees discuss the application of a UK extra-statutory concession in certain types of M&A transactions.
"Lurking in almost every sale and purchase contract involving a UK taxpayer is an adjustment to consideration clause. This boilerplate provision is a nod to paragraph 13 of Extra Statutory Concession D33 (ESC D33). Paragraph 13 tells us that any warranty or indemnity payments between the purchaser and seller under the terms of a contract shall be treated as an adjustment to the consideration under that contract, to the extent permitted by law (rather than being a capital sum derived from the disposal of a separate asset, i.e. the right to claim)."
