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HMRC internal manual

Inheritance Tax Manual

Valuing the business: Investigating the profit and loss account

As part of your investigation you should look at the profit and loss account as

  • it may show a deduction for rent which could indicate that the business had a tenancy, the capital value of which may not be shown in the balance sheet;
  • it may indicate that assets supposedly used in the business are in fact private investments;
  • it may show sources of income that indicate investment activities or assets.

Shares and Assets Valuation also use the profit and loss account to value goodwill.