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HMRC internal manual

Business Income Manual

Specific deductions: administration: valuation costs

You should allow the cost of valuations of business premises, stock, plant, machinery or other business assets if made for fire insurance purposes but not if made in connection with such matters as company reconstruction, probate etc. Subject to this, you should allow the cost of valuing stock-in-trade, whether periodically or on acquisition or disposal, except on the cessation of a trade by reason of the death of the sole proprietor.

You should allow the cost of valuations made by companies for the purpose of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, SI 2008/410, Schedule 7 Paragraph 2. Such a valuation is required for the directors’ report to be attached to the balance sheet if:

  • there is a substantial difference between the market value and the balance sheet value of assets consisting of interests in land, and
  • the difference is, in the opinion of the directors, of such significance as to require the attention of the members of the company or the debenture holders to be drawn to it.

You should allow the cost of valuations made for the purposes of inflation accounting. Such valuations, normally of land and buildings, are made to arrive at the current cost to the business of replacing the assets in their existing condition.

For guidance on professional fees for the valuation of tenant right (or way-going) when a farm changes hands, see BIM55290.

For guidance on valuer’s fees in connection with the security for a qualifying loan, see BIM45815.