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HMRC internal manual

Capital Gains Manual

Assets: principles of valuation: where collective valuation does not apply

Where the statutory hypothesis requiring a valuation proceeds on the assumption of a disposal of a single asset by itself the principle established in Gray cannot apply. For example, in Henderson v Karmel’s executors (58 TC 201) the court held that even though at 6 April 1965 Mrs Karmel owned both the freehold interest in a farm and controlled the tenant company, so having the power one way or another to terminate the company’s interest, that was insufficient to value the freehold interest on a vacant possession basis for Capital Gains Tax rebasing to 6 April 1965. This was because the only asset included in the disposal was Mrs Karmel’s freehold interest, so that interest was all that could be valued as at 6 April 1965 - it was for valuation purposes not possible to lot the freehold interest together with the shareholding in the company that she owned at that date.

In Stephen Marks v HMRC (TC/2010/01706) the First Tier Tribunal addressed the question of whether for the purposes of Capital Gains Tax at 31 March 1982 shareholdings owned by the same person in two companies (the trades of which were complementary) should be valued separately or together. There had been a reorganisation of share capital in 1983 and the Appellant had subsequently made disposals of shares in the new company It was held that having regard to the provisions in TCGA92/S126-138 the Appellant held two separate assets on 31 March 1982 and each asset had to be valued separately.

Other examples of valuation hypotheses for which assets have to be valued singly include

  • TCGA92/S17 where there is a disposal of an asset for consideration deemed to be equal to its market value, see CG14530+
  • TCGA92/S35 where a valuation of an asset is required for the purpose of rebasing to 31 March 1982, see CG16700+.

The single asset valuation for TCGA92/S17 is modified by TCGA92/S19 and TCGA92/S20 where there is a series of linked transactions between connected persons, see CG14650+. Each disposal in the series may be treated as being made for consideration equal to a proportion of the aggregate value of all the assets in the series.