While every attempt will be made to ensure that information provided is accurate at the time of publication, it should be treated as guidance only and does not constitute legal or professional advice. Tax law and guidance changes frequently and readers are advised to consult the current relevant publication for the most up-to-date information on this topic.

Q: I act for a private UK company which is negotiating the purchase of another. An earn-out has been commercially agreed, so the consideration would include deferred payments payable (if at all) by reference to future profits. The sellers (all individuals) suggest that, instead, the buyer issues loan notes to them, with a face value equal to an optimistic estimate of the earn-out. They would then warrant the future profits of the target and, in the event of a breach, the redemption value of the loan notes would be reduced. Are there any tax issues attached to this for a buyer?

The answer to this question was provided by Graham Brough, Consultant, Rosetta Tax

Download the full article