Finance Monthly. Expert Insight Expert Insight 15 Finance Monthly. TAX ADVICE HAS BECOME A DEAL RISK DISCIPLINE — NOT A COST-SAVING EXERCISE Before founding his own policy-focused organisation, Dan Neidle spent more than two decades at Clifford Chance, rising to become the firm’s senior London tax partner. During that time, he advised multinational corporates, financial sponsors and boards on some of the most complex tax questions embedded in major transactions. Today, his perspective on tax advice reflects how dramatically the role of the tax lawyer has changed — particularly for dealmakers navigating acquisitions, exits and reputational exposure. Finance Monthly spoke with Neidle about why tax advice is no longer about optimisation, how historic decisions now shape deal outcomes, and what sophisticated clients really want from their legal advisers. DAN NEIDLE - FOUNDER OF TAX POLICY ASSOCIATES 14 When dealmakers think about tax, many still assume it’s about minimising liabilities. Is that how clients approach it today? Not at the serious end of the market. Large corporates, institutional investors and private equity sponsors are not looking for clever tricks. They’re looking for certainty. “Tax advice today is fundamentally about risk. Clients want to know what could go wrong, what might be challenged, and whether something done years ago could suddenly become a problem in the middle of a transaction.” That’s a very different mindset from the past. The emphasis has shifted from optimisation to exposure management, particularly when deals are under scrutiny from regulators, investors and the public. How does that change play out in M&A and investment due diligence? Tax advisers are increasingly focused on the past rather than the future. In acquisitions, the key question is often not how to structure the deal, but what the buyer is inheriting. Historic tax positions — sometimes taken decades ago — can sit quietly until a sale, IPO or refinancing forces everything into the open. Some of those positions were taken in a very different legal and enforcement environment, and they don’t always stand up well today. For buyers, that can affect valuation, warranties, indemnities, insurance, and occasionally whether the deal goes ahead at all. Is enforcement really tougher now, or is that perception overstated? It’s very real. Tax authorities are better resourced, better coordinated internationally and much more confident about litigating. “The era when large companies could rely on complexity or opacity to manage tax exposure has gone. If something is aggressive, it will eventually be challenged — and in most cases, the taxpayer will lose.” Courts are also far less tolerant of artificial arrangements. That reality feeds directly into how boards and deal teams think about risk. How much does reputational risk now influence tax advice? In many cases, more than the legal risk itself. Clients don’t just ask whether something is lawful. They ask how it would look if it were public, how it would read in a prospectus, or how it might be interpreted by a regulator or parliamentary committee years later. Tax behaviour has become a proxy for governance. Advisers have to factor that in, because a technically defensible position can still be commercially disastrous if it undermines trust. Do you still see aggressive tax planning among major corporates? Very rarely — at least where serious capital is involved. “The cost-benefit calculation no longer makes sense. You might save some tax, but you introduce uncertainty, delay transactions, and potentially invite scrutiny that far outweighs the upside.” What clients increasingly want are boring, defensible positions. That may not sound exciting, but when you’re executing a complex deal or preparing for an exit, boring is exactly what you want. How does this affect founders or private equity sponsors preparing for exits? Exits are where historic decisions really surface. When you prepare for a sale or IPO, everything is reviewed in detail — often far more closely than when those decisions were originally made. Structures that were put in place early on, sometimes with limited documentation or poor advice, can suddenly become very visible. Even if they don’t derail a transaction, they can slow it down or reduce value.
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