Capital Gains and other taxes manual

Appendix 24: initial appraisals

The Valuation Office Agency's (VOA) technical manual used to assess capital gains and other taxes.

The procedure for carrying out initial appraisals is set out in Section 6, Part 2 of this Manual.

1. Information sources

The details included in any valuation report provided by the taxpayer.
The acquisition cost or any arms length sale price, when these are close to the valuation date.
Any sales or lettings of parts of the property.
Typical yields for commercial/industrial properties.
Property Market Reports for relevant years including 1982.
Rating and Council Tax records. For non-domestic properties the Rating List entries will offer a starting point for an estimate of rental value.
Details of sales of comparable properties. For domestic properties a quick postcode search for comparables may be carried out. For the purpose of the initial opinion it is only necessary to record a minimal number of comparable transactions.
Digital Maps, DEFRA plans, Geological plans etc.
Copies of planning records including Unitary Development Plans.
Press reports (for example EGi).

2. Relevant factors

The relevant factors that will influence the decision of the sifter include:

Any information about the tax at stake.
The variation between the figure returned and the initial figure arrived at in Stage 1 above.
Given the variety of property types, geographical markets and valuation dates encountered an ‘acceptable’ percentage valuation tolerance cannot be laid down, but it must be borne in mind that our objective is to target our resources at the most tax-significant cases.
The probability of success in negotiation/subsequent litigation. There are circumstances where we may believe that the returned valuation is correct but we have no evidence (and little prospect of getting that evidence) to prove it.
Where information is lacking, the prospect of securing the missing data. An example here is that of pre-enquiry cases where HMRC may ask for guidance on the value of land simply identified as “50 acres of farmland in Loamshire”. If the land cannot be identified from a search of sales by the named taxpayer the appropriate response to the enquiry would be to advise HMRC that agricultural land in Loamshire, ignoring buildings, has a value in the range £x-y/acre.
Support supplied for figure returned. For example, a professional valuation supplied for a purpose other than the tax computation can be accorded more weight than an accountant’s mathematical interpolation between purchase and sale prices.
Robustness of initial opinion. Clearly the sifter will have more confidence in some Stage 1 opinions than others, but it must always be borne in mind that this is a risk assessment process, not one offering guarantees of infallibility.