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HMRC internal manual

Capital Gains Manual

Valuation: unquoted shares: cases where a valuation has been applied without reference to SAV

Cases in which a valuation has been accepted without reference to SAV should be dealt with as shown below.

Is it possible to re-open the valuation?

You will need to consider if it is possible to make a discovery. For guidance on the discovery provisions refer to EM3201+ in the Enquiry Manual.

If a valuation has been applied in a case which produces a capital loss for 1995-96 or an earlier year it may be possible to reopen the valuation. This is because, for 1995-96 and earlier years, there is no statutory way of agreeing a loss unless there are gains against which it can be set, see CG15812. However unless a discovery can be made you will not be able to assess any gain that arises on a different valuation.

For 1996-97 onwards, under Self Assessment, the loss has to be claimed and quantified, see CG15813. So if the claim is not final, it may be possible to re-open the valuation.

What effect does the agreed valuation have upon later disposals by the same taxpayer?

A 31 March 1982 value may have been agreed to settle a part disposal. This should be the value of all the shares treated as held on 31 March 1982, see CG59580+. Statutorily you are not obliged to use the same value to deal with a later disposal of some or all of the remaining shares held on 31 March 1982. However, the agreement may make it difficult for SAV to negotiate a different value.

What effect does the agreed valuation have upon disposals by other taxpayers?

It is common for a number or all the shareholders in a company to sell their shares at the same time. One shareholder may have had the value of their shares mistakenly agreed without reference to SAV. You are not statutorily obliged to use the same valuation when dealing with other shareholders. Shareholders may argue that the HMRC Charter requirement to treat everyone even-handedly obliges us to accept the same value. HMRC policy under the Charter is to treat individual taxpayers and all other taxpayers in similar circumstances with equal fairness by applying the law correctly in each case. The Charter does not oblige HMRC to repeat any mistake we make. This means that we should not give the benefit of a valuation agreed by mistake with one taxpayer to other taxpayers even where they are party to the same transaction. By seeking to agree a correct valuation we are trying to settle the taxpayer’s affairs impartially by asking them to pay what is due under the law. If a taxpayer is unhappy with this approach, it is open to them to follow the departmental complaints procedure as set out in . If you feel that the case raises issues on which you need advice, contact the Complaints Manager in your Directorate.

Cases of doubt or difficulty

The guidance above should enable you to settle most cases in which you establish that, without reference to SAV, there has been an agreement to a valuation of unquoted shares. Where you experience difficulty in settling a case, you may be able to obtain further advice. If the difficulty relates to the question of whether you have made a discovery, refer to Central Policy Tax administration Advice.

If you have explained HMRC’s position in a case and the taxpayer is unwilling to commence or resume negotiations with SAV, the next step may be to issue a closure notice. You should first submit the case with a report to Capital Gains Technical Group.