Inheritance Tax Manual

Appendix 23: the Lands Tribunal

The Valuation Office Agency's (VOA) technical manual relating to Inheritance Tax.

The Lands Tribunal was established by the Lands Tribunal Act 1949 and consists of a President and such number of members as the Lord Chancellor may determine, being Barristers, Solicitors and Surveyors.

Proceedings before the LT are subject to the LTA 1949 and The Lands Tribunal Rules 1996 (SI 1996 No 1022) as amended in 1997,1998, 2003 and 2006.


The jurisdiction of the LT in IHT matters derives from s.222 IHTA 1984:

222 (1) A person on whom a notice [of determination] under section 221 above has been served may, within thirty days of the service, appeal against any determination specified in it by notice in writing given to the Board and specifying the grounds of appeal.

(2) } [Provide for appeals to be referred to the Special Commissioners or the High (3) } Court].

(4) An appeal on any question as to the value of land in the United Kingdom may be to the appropriate tribunal

(4A) If and so far as the question in dispute on any appeal under this section to the Special Commissioners or High Court is a question as the value of land in the United Kingdom, the question shall be determined on a reference to the appropriate tribunal

(4B) In this section the “appropriate tribunal” means –

  1. where the land is in England or Wales, the Lands Tribunal

  2. where the land is in Scotland, the Lands Tribunal for Scotland

  3. (applies to Northern Ireland)

(5) In the application of this section to Scotland, for references to the High Court there shall be substituted references to the Court of Session

Reference to the Lands Tribunal

On receipt of an appeal against a notice of determination concerning the value of land HMRC(IHT) will refer the matter to the Board’s Solicitor who will arrange for the reference to be made to the LT.

Choice of Witnesses

Rule 42 LT Rules 1996 provides that not more than one expert witness on either side shall be heard except in relation to certain specialised compensation claims unless otherwise ordered. In cases which require more than one expert witness (e.g. Building Surveyor or Mineral Valuer) the HMRC Solicitor should be alerted at an early stage so that the Tribunal’s consent may be sought.

Any valuer nominated to be an expert witness in any proceedings before the LT should be approved by CEO(DVS). In this connection it should be borne in mind that the expectation of the LT that the evidence should be given by the best available expert witness should be consistent with the proper use of resources and the need to afford opportunity to valuers to gain experience, particularly when the reference is straightforward, without complexity of valuation or point of principle.

Normally an outside witness (including retired staff) whether of fact or as an expert, will not be called to give support to HMRC’s case, but if the DV considers it desirable, a full report should be made to CEO(DVS).

Preparation of Case

Prior to any hearing before the Lands Tribunal the DV will have to prepare the following documents: 1. Rule 42 documents including Expert’s Report (see Appendices 24 & 25). 2. Statement of agreed facts (see below).

Exchange of Documents

Rule 42 LT Rules 1996 contains specific provisions regarding the exchange of expert witnesses’ documents covered by that Rule (e.g. experts’ reports, plans, valuations, schedules of comparables - see Appendix 25) prior to the hearing.

Practice Direction 16 of 2006 refers to expert evidence. Direction 16.7 of the directions is concerned with the lodging of experts’ reports. The expert witness will not then be allowed to give evidence which goes beyond what is stated in the report without leave of the Tribunal to do so (Direction 15.2). In essence therefore the report should contain all matters to which the expert intends to refer.

Practice Direction 16.11 of 2006 states that, after the exchange of experts’ reports, the Tribunal will normally require experts of like discipline to meet in order to reach agreement as to facts – plans, photographs etc; to identify the issues in the proceedings and where possible reach agreement on the issues. The Tribunal may also direct that the experts produce a joint statement showing those facts and issues on which they agree and those facts and issues on which they disagree and a summary of their reasons for disagreeing.

Statement of Agreed Facts

The onus for preparation of a draft statement for agreement does not lie strictly with either the appellant or the respondent. However the DV should always give consideration to what items should be included, covering all significant facts in relation to the case in question. Typical items for inclusion would be: 1. Concise summary of the background to the dispute (e.g. chargeable occasion, statutory provisions etc) and the matter in dispute. 2. Description of property (including dimensions/areas as appropriate) and locality. 3. Maps, plans, photographs and any other factual exhibits. 4. Details of comparables including descriptions and sales/valuation details. 5. Details of any elements of the valuation, which are agreed, if applicable.

Discovery of Documents

By Rule 34 of the LT Rules, the Tribunal or the Registrar may on the application of any party to the proceedings, or on its own volition, order the delivery to the Tribunal of any document in the possession of any party. Such documents can then be inspected by the other party in the case.

This rule also enables the Tribunal to obtain particulars of relevant facts of the contentions to be relied upon by any party and to crystallise the issue, or issues, to be tried by the Tribunal.

Pre-trial Review

The Tribunal and the Registrar have power, under Rule 39 to order a pre-trial review of the case so that directions can be given to the parties to secure the just, expeditious and economical conduct of the proceedings.

Preliminary issues

Rule 43 allows the Tribunal, on the application of any party to order any preliminary issue in the proceedings to be disposed of at a preliminary hearing.

If, in the Tribunal’s opinion, the decision on the preliminary issue disposes of proceedings, this hearing shall be treated as the hearing of the case or the Tribunal may make such other order as it thinks fit.

Nature of Hearing

It is up to the Tribunal to determine the nature of the hearing (if indeed there is to be one).

Practice Direction No. 3 of 2006 requires the Tribunal to assign each case to one of four procedures:

1.the standard procedure – this is the traditional procedure. The case management will be in the hands of the Registrar, who will give directions and allocate the case to a specific Member, who will preside over a full hearing, with both sides being represented by an advocate, who can call various witnesses to give evidence;

  1. the special procedure – this procedure will be used in more complex cases; whereby a case will be allocated to a specific Member (or Members), who will order a pre-trial review to be held under Rule 39, prior to the full hearing;

  2. the simplified procedure – this procedure is detailed in Rule 28 and will be used where no substantial issue of law or valuation practice, or substantial conflict of fact, is likely to arise and all parties consent to its use. The objective is to move to a hearing as quickly as possible, with a minimum of formality and cost. The hearing is informal and strict rules of evidence do not apply;

  3. the written representations procedure – this procedure is detailed in Rule 27, whereby the Tribunal, with the consent of the parties to the proceedings, order that the proceedings be determined without an oral hearing.

The LT sits in public. HMRC will not normally make an application for a case to be progressed under Rule 27 (written representations). If the DV becomes aware that another party has so applied, CEO(DVS) should be informed immediately.

The standard procedure

Practice Direction 18 of 2006 states that the procedure at the hearing is within the discretion of the presiding member. However, the procedure will normally be as follows:

  • The advocate representing the appellant or maker of the reference opens – i.e. in IHT cases, the taxpayer. The advocate will indicate the matter in dispute, the facts to prove, the evidence which will be given and the relevant statutory provisions.

  • The advocate representing the appellant or maker of the reference will call any expert witnesses and witnesses of fact. An expert witness is not normally allowed to read from their report; however, the Member will normally have familiarised him/herself with its contents prior to the hearing and may order it be taken as read. Certainly there is normally no objection, with the consent of the LT Member, to witnesses refreshing their memory from notes or copies of valuations, schedule of comparables, or the like. Usually the appellant’s advocate will take the witness through his/her report, highlighting any parts, which are considered to be of particular significance. After being called and sworn, the witness will remain standing until invited to sit down by the Member.

  • The respondent’s advocate may cross-examine witnesses. Leading questions may be asked in cross-examination.

  • At the conclusion of cross-examination the advocate for the appellant or maker of the reference may re-examine the witnesses, each re-examination to be confined to clarification of matters dealt with in cross-examination, and must not introduce new evidence.

  • The respondent’s advocate will then set out the respondent’s case, calling witnesses (e.g. DV) who may similarly be cross-examined and re-examined.

Care should be taken that the DV’s independent professional standing and integrity are not impugned, particularly by over-familiarity with the HMRC Solicitor or other HMRC Officers, and that the witness does not appear to be prejudiced. It must be remembered that the role of an expert witness is to assist the Tribunal in reaching a decision. It is not for the witness to adopt a narrow adversarial viewpoint excluding all possibilities without due consideration, and certainly no element of advocacy should enter into the evidence.

While the DV is “in the box”, i.e. after being called and before being released (including adjournments prior to the completion of giving evidence) the witness must not discuss the evidence with anyone. If the HMRC Solicitor needs advice while the DV is “in the box”, CEO(DVS) will normally provide it.

The witness must avoid referring to VOA Manuals or other instructions, as well as PDs or settlements for which there are no disclosure consents. If questioned on any privileged matters the witness should act in accordance with Part 16 of the Customer Services Manual – Information protected by public interest immunity. ◦ Proceedings end with a closing statement by both parties.

The simplified procedure

The simplified procedure is much more informal than the standard procedure. The presiding member will act as an arbitrator and adopt any procedure he/she feels to be fair.

Strict rules of evidence do not apply and evidence will not be taken on oath, unless the Tribunal orders otherwise. The hearing will always be completed in a single day.

Written representations

The Tribunal will make such orders regarding the lodging of documents and representations as it feels appropriate.

Normally, following the exchange of expert’s reports, each party will be given the opportunity ot comment on any item in the other party’s report but will not be allowed to introduce fresh evidence, unless it is to be used to counter assertions made in the other party’s report.

Non Appearance

If one party fails to appear at the hearing the Tribunal will either dismiss the appeal or require the other party to present their case and will in due course proceed to make a determination. This may however be set aside under Rule 49(3) if the absent party can show sufficient reason for absence. The case will then be reheard at a later date.


Rule 50 provides that the decision of the Tribunal shall be given in writing. The decision may however be given orally where the LT is satisfied that this occasions no injustice or inconvenience to the parties. The HMRC Solicitor would normally object to an oral decision in cases involving points of principle.


As a general rule costs follow the event so that a successful party is entitled to apply for an order that costs be paid by the unsuccessful party.

Costs in proceedings relating to IHT cases will, by Rule 52, be in the discretion of the Tribunal and may be a fixed lump sum or an award on one of the County Court or High Court scales of costs depending on the complexity of the issues raised and the amounts involved.

There is no formal procedure for making a sealed (“Calderbank”) offer as in compulsory purchase compensation cases, but it may be possible in appropriate cases for an offer to be made “without prejudice” but on the understanding that it will be brought to the Member’s attention for the purposes of the award of costs in the event of the decision being no more favourable to the parties than the figure offered. Any such offer will only be made by HMRC(IHT) or by the HMRC Solicitor and in no circumstances may a DV make such an offer unless specifically directed to do so.

When the Tribunal’s decision is read the HMRC Solicitor will, where appropriate, make an application for costs. To allow the HMRC Solicitor sufficient time to consider costs, the DV’s chronological diary (kept in accordance with section 37 para 37.35 should be forwarded to the HMRC Solicitor via CEO(DVS) as soon as possible after the hearing.