Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
, see all updates

Raising enquiries into incorrect accounts, information and documents: undervaluations of land and buildings

The guidance (IHTM36153) that applies for raising enquiries on undervaluations in general also applies to undervaluations of land and buildings.

But to establish whether the taxpayers were entitled to rely on any professional valuation obtained you may want to check

  • whether all relevant information available to the taxpayer concerning the property was passed to the valuer
  • that any professional valuation properly considered development potential and any ’hope’ value was appropriately reflected in the overall valuation and not specifically excluded
  • whether the taxpayer questioned any valuation advice which obviously ignored relevant information or which did clearly not represent an open market valuation
  • whether any significant assumptions made by the valuer about the property which affected its open market value were checked by the taxpayer.

It is reasonable to expect that the value of any asset included in an account is a realistic one that takes into account all the information available to the taxpayer prior to signing and delivering an account. If the property was up for sale before the account was delivered you may, in addition to any questions at IHTM36153, also need to ask

  • were any offers received (if so, obtain details of any offers made, to include when they were made, by whom they were made and the amount offered)
  • where applicable, were best and final sealed bids invited (if so, the same details as above should be sought)
  • was a sale agreed or contracts exchanged before the account was delivered (if so, to whom, when and at what price)?

Any argument developed on these lines will be less reliable the further away form death the marketing activity takes place, particularly in a rapidly rising market. The VOA (IHTM23002) should be able to advise you on the state of the local market. The taxpayer should consider carefully all such market information, as it may well be a better indicator of open market value (IHTM09703) than a valuation alone and, if appropriate, reflect it in the final value included in the account.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)