It may be common practice to buy a business with a contract stipulating that the seller will honour its tax obligations. But as Canadian mining and exploration company Ivanhoe Mines has discovered, such a contract can be difficult to enforce against an unscrupulous seller, involving huge costs and even litigation in other countries.

In 2008, as part of the sale arrangement for GB Mining & Exploration SA, Ivanhoe and seller Tony Gardner agreed that Gardner would pay the tax liabilities of the company. But, dissatisfied with the SA Revenue Service (Sars) assessment for the company, Gardner took the matter to the tax court, and then on to the Supreme Court of Appeal in 2014.

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