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HMRC internal manual

Business Income Manual

Builders, property dealers & developers: valuation: substantial adjustment

You should take the action outlined at BIM51575 onwards where:

  • the question of the valuation of land and buildings is relevant to the determination of taxable trade profits; and
  • the valuation may give rise to a substantial adjustment.

Whether a valuation may give rise to a substantial adjustment will depend upon the particular facts of the case. Local knowledge and the market conditions prevailing at the relevant time are factors to bear in mind.

The fact-finding process will involve you in looking at the surrounding circumstances to see what was happening at the particular site both before and after the balance sheet date. You should consider:

  • the general activities of the taxpayer;
  • any applications for planning permission;
  • the state of work on site;
  • details of all valuations made and, once identified, the assumptions used in arriving at them.

In the absence of documentary evidence to the contrary, the Tribunal is likely to accept the taxpayer’s oral evidence on valuation points.

If the property in question is outside the United Kingdom, see the guidance at BIM51610.