Inheritance Tax Manual

Section 16: shares and assets valuation

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

Part 1

Introduction

16.1 Shares and Assets Valuation

Shares and Assets Valuation (SAV) is a section of the HMRC Charities Assets and Residence (CAR) Business Unit mainly dealing with the valuation of unquoted shares. SAV also provides specialist valuation advice to HMRC in respect of a variety of other assets including goodwill, livestock, bloodstock, patents and royalties, gold and other bullion, ships and aircraft, mobile homes and wine.

VOA assistance to SAV

16.2 General

SAV will usually request advice from the VOA in one of two circumstances, namely:

  • when the value of shares in an unquoted company reflects wholly or substantially the value of underlying assets comprising either freehold (feuhold in Scotland) or leasehold property, or plant or machinery, owned by that company, SAV will refer the case to the VOA for a valuation of those assets (see para 16.3); or
  • when SAV is asked to provide a valuation of goodwill in a business and deccides that a property valuation will also be required (see para 16.16 below.)

16.3 Assistance in ascertaining the value of a shareholding

When SAV has requested valuation advice in order to determine the value of the shareholding transferred, caseworkers should not enter into discussion with the taxpayer or their representative concerning the value of the shares.

In such cases, it should be noted that there is no requirement for the VOA to ascertain the “value transferred” or the “value of the property transferred” since these terms relate to the value of the shareholding, which is a matter for SAV. The property which is required to be valued has not of itself been transferred (see also para 16.8).

References from SAV

16.4 General

Most references from SAV will be forwarded on form SAV/VOA1 (Appendix 5). However, the following types of SAV cases will normally be referred by memorandum (see also para 16.44 below):

  • goodwill,
  • minerals,
  • shipping and air transport,
  • SDLT,
  • foreign property,
  • plant and machinery
  • milk quotas
  • cases forwarded via the Land Portfolio Valuation Unit (LPVU).

16.5 Information on Form SAV/VOA1

As well as giving the name of the taxpayer, the company involved and details of the officer dealing with the case, Form SAV/VOA1 will contain the following information:

  1. the nature of the tax e.g CGT/SDLT/IHT);

  2. the date of valuation;

  3. the total value returned for the property(ies);

  4. details of the tolerance range within which the returned value can be accepted (normally this will be the larger of 15% or £30,000, if different tolerances are to be utilised the box will be ticked and details of the tolerances required will be included on a separate memorandum);

  5. details of any other SVT sector geographical areas involved

SAV will normally provide details of the properties to be valued on Form CAP37 (Appendix 7).

16.6 Information on Form CAP37

Form CAP37 again contains details of the company involved, the date of valuation and SAV reference. This form is normally completed by the taxpayer or their agent and additionally will contain: 1. The name and address of any person the VOA should contact, together with their reference and telephone number (but see para 16.32 below); 2. for each item number (column 1), the full address or description of the property to be valued (column 2), details of the tenure under which it is held (column 3), details of any lettings (column 4), details of any agricultural/timber element (column 5) and the value returned by the parties (column 6). Both of these latter elements will be totalled at the foot of the respective columns.

Reserved

Basis of Valuation

16.8 Adoption of statutory basis of “open market value”

In SAV cases, where the property being transferred is the shareholding and not the company assets, there is no statutory basis of valuation for the underlying property.

In particular SAV consider that in strictness the principle in IRC v Crossman (1937) AC26 applies to the Company shareholding only, and does not operate to remove a bar on assignment of a leasehold interest (which term includes annual agricultural tenancies). Nevertheless the leasehold interest is, in effect, still assignable by a transfer of the company’s shares and, as a company is immortal, an annual agricultural tenancy assigned in this way can continue indefinitely. Accordingly, a valuation on a similar basis to Crossman is generally appropriate but Crossman should not be cited and, if this issue arises in negotiations, the caseworker should withdraw from negotiations and seek further instructions from SAV. Meanwhile the parties should be advised to conduct any further correspondence on the matter with SAV. An opinion of value should be formulated on the Crossman basis and reported, without negotiation, to SAV, stating why it was necessary to withdraw from negotiations.

Generally, however, the underlying company property or assets should be valued on the basis of the statutory definition in s.160 IHTA 1984 and s272 TCGA 1992 “open market value” disregarding any “flooding of the market”. Any relevant legal principles which have evolved over the years when the Courts have ruled on the meaning of the similar definition for ED purposes contained in s.7(5) FA 1894 should also be applied (see Section 7.)

Finally caseworkers must be careful to distinguish between those cases where a reference has been made in connection with a valuation of shares and those where SAV has been asked to carry out a valuation for some other purpose not connected with share valuation. In the latter case a valuation on the strict statutory basis may be applicable (e.g. where a property valuation is required so that disposal proceeds can be apportioned between the property and goodwill (see para 16.16). If there is any doubt as to what assets are being taxed or whether the statutory basis should apply to a valuation, advice should be sought from CEO.

16.9 Statutory basis unsatisfactory or objected to

There will be cases where the application of the statutory basis of valuation produces an unreasonable result. SAV will normally seek to identify such cases and issue instructions accordingly. However, if the parties refuse to accept that a valuation on the statutory basis is appropriate or if the caseworker feels that application of the statutory basis would produce an unreasonable result, the case should be referred to CEO.

16.10 Reserved

Asset Valuation

16.11 General

In all cases valuations should be based on open market value (see paras 16.8-9 above), having regard to the evidence of open market transactions in similar property in the normal way. Regard should be had to both existing and alternative uses to the extent to which these are reflected in the price obtainable in the open market.

16.12 Properties which are normally sold as fully operational businesses

Certain properties change hands in the open market at prices based directly on their trading potential e.g. hotels, some restaurants, public houses, cinemas and other specialist leisure properties, petrol filling stations residential care homes and mineral undertakings. Therefore, when valuing an interest in possession in such properties, regard should be had to the accounts of the business being conducted there from.

16.13 Plant and Machinery

SAV may request a separate valuation of plant and machinery at a property. In such circumstances the value of the plant and machinery should be reported separately from the freehold or leasehold property (see para 16.66 below).

The services of the National Assets and Building Surveyors (Plant and Machinery Team) are available for assistance. An inspection should be made in all cases, where a valuation of plant and machinery is required.

SAV will, if possible, furnish schedules of the plant and machinery to be valued. Where the request is just in regard of general plant and machinery, all the plant and machinery on the site should be valued (including cars and motor vehicles) except for that which would normally be valued as part of the building eg. foundations, settings, and items used in connection with the main transmission of power, heating, cooling, ventilating, lighting, draining and supplying of water and the protection of the site from hazards.

Goodwill

16.14 General

Goodwill is not easily defined but the two commonly quoted definitions are:

  • Lord McNaghten’s description in the case of IRV v Muller and Co Margarine Ltd (1901) (AC217): “It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connections of the business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old established business from a new business at its first stage.”

  • The definition contained in the Shorter Oxford Dictionary:

“Goodwill is the privilege granted by the seller of a business to a purchaser of trading as his recognised successor; the possession of a ready-formed connection with customers considered as a separate element in the saleable value of a business.”

So for goodwill to exist there must be a business and the VOA will be involved in the valuation of the property from which that business is conducted, together with any other physical assets.

16.15 Types of Goodwill

In the past we have traditionally grouped goodwill into different types: e.g. “inherent”, “adherent” and “free”

This approach is no longer considered helpful and has led to confusion in that we have been trying to find the appropriate heading for the goodwill rather than looking at the fundamental question of whether it is goodwill or not.

Inherent and adherent are not really goodwill but form part of the property asset (although this is by no means accepted by all professionals).

16.16 Scope of assistance

SAV deals with all cases involving the valuation of goodwill for Capital Gains Tax and other HMRC purposes, but will request VOA assistance where appropriate. For the avoidance of doubt, if a reference is received direct from another branch of HMRC either requesting a valuation of goodwill, or it is apparent that an element of goodwill will need to be valued, SAV (Goodwill Section) should be consulted before any further action is taken. Normally, where a specific valuation is required in order for SAV to determine the value of the goodwill of a business, the request will be routed either via CEO Professional Support (HMRC Team) (for CGT cases), or the LPVU (for SDLT and non capital gains Corporation Tax cases)

For details of procedure in Capital Gains Tax cases see CGT Manual 7.40 - 7.44.

16.17 Licensed property

A valuation of licensed property will normally reflect an element of trading potential attaching to the property by reason of the licence, estimated by reference to trading figures, but no attempt should be made to furnish a separate figure for it.

16.18 Mineral undertakings

Special considerations may apply to the treatment of goodwill in mineral cases. Problems relating to minerals goodwill should be referred to the Mineral Valuer.

Business relief

16.19 General

Transfers of value in respect of shareholdings in companies may be eligible for business relief under the provisions of ss.103-114 IHTA 1984. Reference should be made to Section 11.

16.20 Caravan sites

SAV may require additional information to determine whether business relief is applicable in respect of companies operating caravan sites. Any valuation request in respect of a caravan site will usually be accompanied by a questionnaire (Appendix 30) and this should be completed and returned when the opinion of value is reported.

Agricultural relief

16.21 General

Agricultural relief (ss.115-124C IHTA 1984) applies to that part of the value of shares in or debentures of a company which is attributable to the agricultural value of qualifying agricultural property, provided that the particular conditions set out in s.122 are satisfied. This will be determined by SAV.

When referring the case SAV will advise by memorandum of any agricultural property owned by a company which qualifies for relief. Reference should be made to Section 9 Part 2 for detailed instructions and requirements on agricultural relief in this respect.

16.22-29 Reserved

Part 2 : Procedure – Initial Not Negotiated References

Procedure on receipt of case

16.30 Registration

All initial references from SAV involving property in England and Wales will be registered at Nottingham IAU Central Processing Centre (CPC). All initial references from SAV involving property in Scotland will be registered in Glasgow Central Processing Centre.

Initial references from SAV, referred on Form SAV/VOA1, should be registered as Case Type 182 (credit type 05) – for the avoidance of doubt, case type 183 should no longer be used. Initial references in cases involving goodwill, minerals, shipping and air transport, SDLT, SAV (Foreign), Plant and Machinery and Milk Quotas will normally be referred by memorandum, often via CEO or LPVU (see para 16.44 below – for the procedures for dealing with such references)

16.31 Misdirected cases

If the CPC forwards the initial case to the wrong caseworker/support, the recipient should forward the case to the actual caseworker/support (if known) or should return it to the CPC with an explanation as to why it has been returned. It will then be the responsibility of either the recipient caseworker/support or the CPC to update CRAC.

16.32 Papers incomplete

If there is insufficient information to identify a property in order to register a case on CRAC, the CPC should contact the SAV caseworker dealing with the case and registration should be delayed until sufficient information has been obtained. Once a case has been registered on CRAC, it should not be cancelled because the papers are subsequently considered to be incomplete but, instead, any clarification of instructions should be obtained from SAV as a matter of urgency. In references involving more than one item where sufficient information exists to register a case on CRAC against at least one of those items, the papers should not be returned and, again, any clarification of instructions should be obtained from SAV as a matter of urgency.

However, should it prove necessary to contact the parties, unless the referral documents clearly state that it is in order to do so, SAV must first be consulted to ensure the parties can be approached. N.B. This is the only instance where contact should be made with the parties at the Initial reference stage.

16.33 Part cases

Part cases arise where a reference involves property in more than one SVT sector area. In such instances the CPC will register a separate case for each sector geographical area involved. As outlined at para 16.5 above, details of other sector areas involved should be included on form SAV/VOA 1; additionally the CPC will advise each area caseworker of the other caseworkers involved.

Any necessary liaison with other sector areas should be undertaken before a report is issued.

16.34 Multi caseworker cases within a SVT geographhical area

References from the CPC will be sent to the sector area co-ordinator (sifter) for HMRC work (see para 16,37 below). If the case then fails the Stage 1 and 2 sift (see para 16.38 below) and there are multiple properties, which fall to be dealt with by more than one sector area caseworker, it is the responsibility of local caseworker support to provide each caseworker with details of the other caseworkers involved.

Any necessary liaison with other caseworkers should be undertaken before a report is issued.

16.35 Acknowledgements

The CPC will not send acknowledgements, it is the responsibility of local caseworker support to send an acknowledgement to SAV, within 5 working days of receipt, which should provide the name of the caseworker, their location and their phone number.

Procedure

16.36 Outline of procedure

All new SAV cases, referred on Form SAV/VOA1 should be subjected to the following three stage sifting procedure:

Stage 1 – initial opinion by Sector Co-ordinator (or nominated caseworker)

Stage 2 – risk assessment by Sector Co-ordinator (or nominated caseworker)

Stage 3 – consideration by caseworker and initial valuation (if required)

These stages are described below

Stage 1 Sift

An initial sift of all incoming cases should be undertaken by the Sector Co-ordinator for HMRC work or a nominated experienced caseworker. At this stage the sifter needs to make a positive decision that the case requires caseworker attention. If the sifter decides that the case does not require caseworker attention, because the valuation is likely to fall within the tolerance range specified by SAV on Form SAV/VOA1, it should be reported back to SAV at this stage (see para 16.41 below).

The sifter should consider the valuation returned from the desk, using any information immediately to hand. The objective is to produce from this a figure or range of figures to inform the risk assessment exercise undertaken at Stage 2.

The following sources of information may be considered:

  1. The details included in any valuation report provided by the taxpayer.

  2. The acquisition cost or any arms length sale price, when these are close to the valuation date.

  3. Any sales or lettings of parts of the property.

  4. Typical yields for commercial/industrial properties – sifters will be experienced valuers and it is anticipated that they will have (or will quickly build up) a view on yield ranges for the major property types across their areas of responsibility.

  5. Property Market Reports for relevant years and 1982

  6. Rating and Council Tax records. For non-domestic properties the 2005 or 2010 Rating List entries normally will offer a starting point for an estimate of rental value.

  7. 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 comparables.

  8. Digital Maps, DEFRA plans, Geological plans etc.

  9. Copies of planning records including Unitary Development Plans

  10. Press reports (for example EGi)

16.38 Stage 2 Sift

The objective of this stage of the procedure is to determine whether, having regard to the initial opinion formed at Stage 1, the figure returned can be accepted or (in the absence of a figure returned) the Sifter’s initial opinion can be supplied directly back to the client.

The relevant factors that will influence this decision include:

  1. The probability of success in negotiation/subsequent litigation. There are circumstances where we may believe a more HMRC-favourable figure than that returned is correct but we have no evidence (and little prospect of getting that evidence) to prove it.

  2. Where information is lacking, the prospect of securing the missing data. An obvious example here is that of pre-enquiry cases where SAV 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 SAV that agricultural land in Loamshire has a value in the range £2-3,000/acre and that this ignores any value attributable to buildings.

  3. 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

  4. 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.

Whilst the above process has been broken down into two stages for the sake of clarity, in practice the steps may in some cases merge into one another. There will be many occasions when it will not be necessary for the sifter to come to their own figure, it being obvious at an early stage that the figure returned is acceptable. (For the avoidance of any doubt, the sifter’s reasoning must still be recorded in these cases, see para.16.41 below).

The aim should be to complete Stages 1 and 2 of the risk assessment within an average of 5 working days of receipt of the case.

If the case fails the stages 1 and 2 of the sift, the credit type should be altered from 05 to 01 on CRAC. Also if the case is to be allocated to a new caseworker, the caseworker details on CRAC should be changed at the same time.

16.39 Stage 3 Sift

On receipt of a file, which the sifter has passed on as being worthy of caseworker attention, the caseworker should review the sifter’s decision and reasoning and, with the addition of their local knowledge consider again whether the case can be reported back immediately. It is considered that a significant number of cases passing initial sift will still fall to be reported back immediately this way.

16.40 Valuation cases

If the caseworker decides that the case merits a full valuation then he/she should examine the papers to decide which of the following scenarios apply:

1) sufficient information is available to provide a valuation;

2) further essential information is required;

3) the case is complex or sensitive and warrants treatment as a request for an agreed valuation.

If the case falls within 3 above, then within 10 working days of the receipt of the case, the caseworker should contact the SAV caseworker and ask whether there is any objection to treating this reference as a request for an agreed valuation. If the SAV caseworker has no objection, the caseworker/support should alter the credit type to 02 and proceed in accordance with para16.50 et seq below.

16.41 Reporting Initial Reference cases

The not negotiated report should be sent to SAV within an average of 20 working days of receipt of the case, using form VO 1164 (see Appendix 6a). This form has been designed as an electronic template and should be completed and then sent by email to mailpoint.a@hmrc.gsi.gov.uk . The covering email should include the SAV reference and name of the SAV issuing caseworker.

Form VO 1164 provides three options. These are . i) No question need be raised on the value returned

ii) The value returned cannot be accepted and my informal opinion of value is £*

  • This valuation is based on the following assumptions.: (see para 16.42 below)

  • The confidence level of this valuation is AB because * (see para 16.43 below)

iii) The matter is now to be treated as a formal reference and a report will be issued as soon as possible.

A copy of the VO 1164 and the sent email to SAV should be retained on the file, for audit purposes.

NB Occasionally SAV will request valuations, under the same reference at different dates (e.g. 31 March 1982 and the date of disposal). Accordingly caseworkers must ensure that the Nature of event and Date of event boxes are completed before sending Form VO 1164 to SAV. Also for Part cases within a single SVT sector geographical area (see para 16,34 above), caseworkers must ensure only one VO 1164 is sent to SAV (normally by the co-ordinating caseworker).

16.42 Valuation assumptions

When a returned valuation cannot be accepted and it is necessary to report an alternative ‘not negotiated’ figure to SAV, caseworkers need to make their best estimate of value based on the information available and making reasonable assumptions. The report should clearly state the basis of valuation and detail any underlying assumptions; particularly where the value reported is substantially different from that returned. Where assumptions have been made that may be value significant (e.g. nature of tenancies), SAV should be requested to advise the taxpayer of those assumptions should they need to communicate the value to them.

If the returned value is being accepted, normally it should not be necessary to detail any underlying assumptions on VO 1164 and they should never be included in cases where the returned value is accepted in cases involving Post Transaction Valuation Check (PTVC) cases (see para 16.64 below).

16.43 Valuation Confidence levels

It is usually helpful to inform SAV of the strength of the evidence to support the valuation figure reported in the Remarks section of the report. For example:

  1. If the caseworker considers that there is good evidence to support the reported valuation then the report should be endorsed with a suitable comment. For example - “The property was sold 6 months after the valuation date for £x and in my opinion this provides good evidence to support the above valuation.”; or

  2. If the caseworker considers that the reported valuation is subject to particular uncertainties and should be treated with caution then the report should also be endorsed with a suitable comment. For example - “The above valuation reflects the hope of obtaining planning permission for residential development but no planning permission was in place at the valuation date. There were particular uncertainties regarding the suitability of the access required for development at the valuation date and the above valuation may be subject to material variation when further information is available. It is possible that a reasonable valuation could be as low/high as £x.”

16.44 Other Initial References from SAV

Initial references in cases involving goodwill, minerals, shipping and air transport, SDLT, SAV (Foreign), Plant and Machinery and Milk Quotas will normally be referred by memorandum, often via CEO.

Such references will normally require the caseworker to provide specific informal valuation advice and accordingly should be registered as case type 182, credit type 01 on receipt

Reports in such cases should normally be on Form VO 1171 and should be endorsed “As returned” or “Not negotiated”, as appropriate. The report should set out any Valuation Assumptions (see para 16.42 above) and should normally comment on the strength of the evidence to support the valuation (see para 16.43 above). The report should normally be sent by email to mailpoint.a@hmrc.gsi.gov.uk or to such other address as specified in the original instruction.

16.45-49 Reserved

Part 3 : Procedure – Negotiated Formal References

16.50 General

Part 2 of this section set out the procedures for dealing with initial informal not negotiated references from SAV. This section sets out the procedures to be followed in formal negotiated references. These will be either:

i) Initial reference cases which are complex or sensitive and the SAV caseworker has indicated the VOA should treat the reference as a formal one (see para 16.40(3) above), in such cases, the credit type should be altered to 02 (It is important for the credit type to be altered during the life of the case and not left to reporting stage to avoid distorting the timeliness statistics).

ii) Cases where SAV indicate from the outset that a negotiated valuation is required and the valuation returned cannot be accepted at the initial sift stage. In these cases, the caseworker should convert the case from a credit type 05 to an ‘agreed’ valuation request credit type 02. (It is important for the credit type to be altered during the life of the case and not left to reporting stage to avoid distorting the timeliness statistics).

iii) Cases where a report has previously been sent to SAV in accordance with para 16.41 above or para 16.70 below and SAV have referred the case back to the caseworker requesting he/she enters into negotiations. In such instances, the original type 182 case should be re-opened, with a credit type of 03.

16.51 Misdirected cases

If, on receipt of the papers, it is found that all or some of the property to be valued is situated in another SVT sector geographical area, the procedures set out in para 16.31 above should be followed.

16.52 Papers incomplete

If the papers are found to be incomplete, the procedures set out in para 16.32 above should be followed.

16.53 Part cases

These are described in para 16.33 above.

Any necessary liaison with other caseworkers should be undertaken before a report is issued or an opinion of value is put to the taxpayer.

16.54 Multi caseworker cases within a single SVT geographical area

These are described in para 16.34 above

Any necessary liaison with other caseworkers should be undertaken before a report is issued or an opinion of value is put to the taxpayer.

16.55 Acknowledgements

If the case falls within category (i) of para 16.50 above, an acknowledgement should already have been sent (see para 16.35 above); however, if the caseworker has changed, SAV should be advised of the new caseworker’s details. In all other cases an acknowledgement must be sent by email to mailpoint.a@hmrc.gsi.gov.uk within 10 working days of receipt. The SAV reference and the name of their issuing caseworker should be included in the email.

The acknowledgement should include the following:

  1. the SAV reference;

  2. the company name;

  3. the taxpayer’s name;

  4. the SAV caseworker’s name;

  5. the VOA reference;

  6. the VOA caseworker’s name;

  7. the VOA caseworker’s telephone number

A copy of the acknowledgement and the sent email to SAV should be retained on the file, for audit purposes.

16.56 Contact with parties

The procedures outlined in Section 27 paras 27.20 - 24 should be followed.

If the parties fail to supply information it should be noted that the information gathering powers under Section 219/219A IHTA 1984 (see Section 27 para 27.22) are only available to SAV in cases where the tax involved is Inheritance Tax. The information gathering powers available in CGT cases are contained in schedule 36 Finance Act 2008.

16.57 Inspections

In formal cases SAV will normally have obtained permission to inspect the property and will provide the name of the person who should be contacted. However, as both the company and the accountable parties are under statutory liability to supply information, enquiries may be addressed to either.

Negotiations

16.58 Parties figure acceptable

Where, after inspection, the values returned by the parties can be accepted, Form VO 1165 (see Appendix 6b) should be completed, endorsing the Nature of valuation supplied as “As returned”. The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

16.59 Parties figure not acceptable

When the returned figure is not acceptable, the procedures outlined in Section 27 para 27.36 should be followed, i.e. the parties should be notified of the VOA valuation using Form VO 1101 (Appendix 11).

16.60 Parties fail to respond to notification of value

If no response is received from the parties within 20 working days of notification under para 16.59 above, a reminder on Form VO 1102 (Appendix 12) should be sent.

If the parties fail to respond to the reminder within 10 working days, a report should be sent to SAV on Form VO 1165, endorsing the Nature of valuation supplied as “Not negotiated - value notified to the parties on (date)”. The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

16.61 Response from the parties

Where the parties respond to the notification of value before the case is reported “Not negotiated” in accordance with para 16.60 above, one or other of the following procedures should be adopted:-

  1. if the parties reply in writing indicating acceptance of the valuation, the case should be reported, on Form VO 1165, endorsing the Nature of valuation supplied as “Agreed”. The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

  2. if the parties reply verbally indicating acceptance of the valuation, the case should be reported, on Form VO 1165, endorsing the Nature of valuation supplied as “Agreed - subject to confirmation”. The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

  3. if the parties do not accept the notified figure, negotiations should commence immediately. If agreement is subsequently reached, the report should be issued in accordance with sub-paras a) or b) above within the appropriate time limit (see para 16.62 below).

If a report is sent SAV in accordance with a) or b) above, a copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

Time limits

16.62 General

The Service Level Agreement with HMRC states formal SAV cases should be reported within an average time of 100 working days from the date of receipt.

16.63 Interim Reports

Interim reports on negotiations are to be sent within 60 working days of receipt (see Section 27 para 27.43 for procedure to be followed). These should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

16.64 Post Transaction Valuation Checks (PTVCs)

The interaction of this service with Self Assessment procedure is explained in CGT Manual Section 6. It should be noted that the PTVC service also applies to valuations of unquoted shares undertaken by SAV. If SAV require a valuation of the company’s property they will, in their reference to the VOA, advise that the valuation is required in connection with a PTVC and indicate the date by which they require a report. If for any reason it is clear that it will not be possible to report a valuation before the date indicated then SAV should be advised as soon as possible.

Reports

16.65 Opinion of Value

Reports should be sent to SAV on Form VO 1165. The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

16.66 Supplementary opinion of value - Plant & Machinery

Where a separate valuation of plant and machinery is required in accordance with para 16.13 above, the following wording should be added to the report (under further information):

“The value of the plant and machinery at that date is £………”

The appropriate endorsement with regard to negotiations should be added

16.67 Supplementary opinion of value - Agricultural property

Where a separate agricultural valuation of qualifying agricultural property is required in accordance with para 16.21 above and Section 9 Part 2, the following wording should be added to the report (under further information)::

“The agricultural value of the qualifying agricultural property included in the above value is £………”

The appropriate endorsement with regard to negotiations should be added

16.68 Supplementary endorsement - Goodwill

Where, in accordance with para 16.16 above, the caseworker has been requested to provide an opinion of value of any item, which is exclusive of goodwill, the following wording should be added to the report (under further information)::

“The valuation of the property (item no…) is exclusive of goodwill”.

16.69 Supplementary endorsement - Aggregation

Section 27.71 sets out the procedure to be followed in multi-property cases, where the caseworker is able to accept or agree an aggregate value of several properties without prejudice to the value of any individual property comprised therein.

In such cases a supplementary endorsement should be added to the report (under further information):

“The parties have been advised that the values attributable to the several items are not necessarily agreed”.

Cases where agreement cannot be reached within time limits

16.70 Reference of cases to SAV where agreement cannot be reached

Where it has not been possible to reach agreement within the relevant time limits (para 16.52-above) for any reason a report should be sent to SAV on Form VO 1165 endorsing the Nature of valuation supplied negotiations have failed. The following information should also be included (under further information):-

  1. the parties’ latest figure

  2. a brief note of the main points of difference, but neither a history of the negotiations nor a breakdown of the valuations is necessary. If however the parties have failed to respond, SAV should be informed.

The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

Credit should be taken at this stage. Following such a report, where SAV are unable to agree a valuation of the shareholding or where the parties, who have hitherto failed to respond, have been persuaded by SAV to enter into discussions, the case may be referred back for a final attempt to agree the value of the property.

Appeal cases

16.71 General

An appeal will arise where the parties dispute any subsequent notice of determination made by SAV. It should be noted that an appeal will be against SAV’s determination of the value of the shareholding, and not the value of the company property or assets, although this may be a relevant factor in evidence.

16.72 DOA reports

If, in exceptional circumstances, an “Unagreed DOA” report is required, a request will only be made by SAV through CEO Professional Support (HMRC Team). CEO Professional Support (HMRC Team) will then issue ad hoc advice concerning action required.

16.73-99 Reserved