PRODUCT HIGHLIGHTS

Primary underwriting focus is on appeals in the United Kingdom, European Union, Asias, Dubai and Hong Kong

Policy limit capacity of at least:

  • €175,000,000
  • €175,000,000
  • €175,000,000

Multi-year (single aggregate) policies with policy terms of up to seven years

Available for:

  • specific tax issues that arise in a taxpayer’s ordinary course of business
  • general pre-closing tax liabilities

Coverage is not available for:

  • pre-packaged tax shelters
  • transactions or planning deemed abusive by the relevant taxing authority

Available as respects tax exposures identified during, or arising as a result of a wide variety of transactions including:

  • financings & investments
  • licensing agreements
  • liquidations
  • mergers & acquisitions
  • restructurings & workouts

InterpretationGap®Tax Insurance can be purchased:

  • before a taxpayer enters into a transaction
  • at the time of transaction
  • after the transaction has closed

INFORMATION

Heybridge’s Tax Insurance (HTIP) product provides insurance to reduce or eliminate the uncertainty relating to the outcome of one or more tax issues by providing reimbursement for financial loss incurred as a result of a successful challenge by the relevant tax authority.

The most common applications for HTIP Tax Insurance are in situations where:

• no clear guidance from the applicable tax authority or tax law precedent is available;

• a taxpayer is unable or unwilling to tolerate uncertainty because of the magnitude of the financial exposure relative to the size of a transaction;

• a buyer has not identified any specific tax issue. but wants to prudently minimize risk relating to the seller’s pre-closing tax issues; and

• parties to a transaction cannot agree on the allocation of potential pre-closing tax liabilities.

HTIP Tax Insurance can also be an effective complement to private letter rulings. Since private letter rulings are issued in reliance upon representations made in the ruling request, the product can be utilized to provide a taxpayer with protection for certain representations that it has made in reliance upon statements made by a third party. such as the party that sold the asset or business at issue.

HTIP Tax Insurance can be designed to include coverage for the following components of financial loss:

• additional tax:
• interest and penalties imposed on such additional tax; and
• the amount by which the taxpayer’s taxes are increased as a result of the payment of proceeds under the HTIP policy (i.e. -gross-up” coverage).

In addition, to further align the policy with the specific tax issue(s), the policy can be designed to:

• cover the subject matter of a tax opinion or tax indemnity, although an opinion or indemnity is not required for the insurance to be put in place to provide coverage for the specific tax issue(s); and

• match the statute of limitations for the specific tax issue(s), up to eighty-four (84) months. Longer policy terms may be available on a case-by-case basis.

Regardless of the situation that requires certainty with respect to a specific tax issue. Heybridge’s experienced underwriting team will work with you to provide your clients with the HTIP Tax Insurance solution they require.

Please note that Heybridge Partners does not underwrite any insurance product in connection with taxes, interest or penalties that may be incurred with respect to any -reportable transaction’ within the meaning of Treasury Regulation section 1.6011-4(b).

Frequently Asked Questions

What types of taxes can be insured under Heybridge’s HTIP policy?

Our HTIP policy can be offered to cover federal, state and local tax exposures in the United States. In addition, our products can be offered for tax exposures arising in United Kingdom, European Union, Asias, Dubai and Hong Kong. Please contact us if you seek insurance for tax exposures in other jurisdictions.

Does Heybridge require that a tax opinion be provided as part of its underwriting process?

While a tax opinion is helpful, it is not required. A memorandum setting out the fact pattern associated with an analysis of the tax exposure by a professional tax advisor will generally provide us with adequate information to provide you with preliminary terms.

Will Heybridge offer its HTIP policy in the absence of a transaction?

Yes. We sometimes offer HTIP Tax Insurance in situations where a taxpayers auditors require that reserves be posted despite agreeing that the practical risk of a tax liability ultimately crystallizing is unlikely

What can be the components of covered “Loss under an HTIP policy?

“Loss” can include the taxes associated with the insured tax exposures, interest on those taxes, gross-up, and in some jurisdictions civil penalties where they are insurable by law.

How can I advise my client what limit of liability they should purchase for their HTIP policy?

As part of the underwriting process, Ambridge will request a description of how the requested limits have been calculated. This should be prepared by the Insured together with its tax advisor.

How long does it take Heybridge to perform a preliminary review of a HTIP Tax Insurance submission?

Generally we can provide preliminary terms within 24 to 48 hours. Completion of full underwriting is dependent upon how quickly detailed information is provided to Heybridge. Heybridge frequently can offer bindable terms within several days after receipt of the initial submission.

What type of underwriting submission does Heybridge need so that an initial HTIP insurance proposal can be offered?

  • A description of the tax exposure for which insurance is desired;
  • An outline of all of the facts that the potential insured’s tax advisors believe are relevant to analyzing the exposure;
  • A calculation of the quantum of the potential tax exposure, the amount of insurance required, and the reason for requesting that amount of insurance;
  • Confirmation that the tax exposure is not associated with a tax shelter, “reportable transaction” or “transaction of interest’; and

Any analysis done by a professional tax advisor.

Will Heybridge offer HTIP Tax Insurance in connection with transactions characterized as “transactions of interest,” ‘reportable transactions° by the IRS?

No.Heybridge Partners does not underwrite any insurance product in connection with taxes, interest or penalties that may be incurred with respect to any “reportable transaction” within the meaning of Treasury Regulation section 1.6011-4(b).

Will Heybridge offer HTIP Tax Insurance where a client has taken an incorrect tax position and is concerned about this position being uncovered on audit?

No. Heybridge’s HTIP Tax Insurance product is only offered in connection with tax exposures where a taxpayers filing position is consistent with what it believes to be proper based upon advice from its tax advisors.

Potential Uses of the product include:

Financing & Investments
Licensing Agreements
Liquidations
Mergers & Acquisitions
Restructurings & Workouts