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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Shares and Securities: Valuation of shares and securities: Valuation of unquoted shares: Valuation: unquoted shares: market value rule

The ordinary rules of TCGA92/S272 (1) apply to the market value of unquoted shares and securities. The value is equal to the price you would expect in an open market sale between a hypothetical willing seller and a hypothetical willing buyer.

TCGA92/S273 deals with the information that would be available to the hypothetical buyer. The interpretation of this Section is a matter for Shares and Assets Valuation (SAV)

A valuation is not required merely because you are dealing with a disposal of unquoted shares. There must be a statutory reason for displacing the amount paid or received for the shares by their market value. For example an arm’s length disposal of unquoted shares acquired in an arm’s length transaction after 31 March 1982 would not require a valuation. Detailed guidance on when a valuation is required can be found in the section of the manual which deals with the particular topic you are considering. It may be possible to accept certain negligible value claims without asking SAV for a valuation, see CG13131.

IF A VALUATION OF A UK OR FOREIGN UNQUOTED SHARE OR SECURITY IS REQUIRED FOR CAPITAL GAINS PURPOSES IT MUST BE REFERRED TO SAV. YOU SHOULD NOT EXPRESS AN OPINION OR NEGOTIATE THE VALUE OF AN UNQUOTED SHARE OR SECURITY UNLESS SAV ASKS YOU TO.

The valuation of unquoted shares and securities is a highly technical matter which requires specialist knowledge. If you negotiate a value you may well agree a figure which is not acceptable to the Department’s experts. Although little may be at stake in your case the agreement can make it very difficult for SAV to negotiate values for

  • similar companies with the same agent
  • later disposals by the same shareholder
  • disposals by other shareholders in the same company.

 

TMA70/S46B (3), TMA70/S47 (3)

Any appeal in which the question at issue is the valuation of unquoted shares or securities in a UK resident company will be heard by the First-tier Tribunal. SAV will take forward such a hearing.