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HMRC internal manual

Shares and Assets Valuation Manual

HM Revenue & Customs
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Capital Gains Tax procedures: goodwill

Although it was once the responsibility of Inspectors to agree the value of business goodwill, all goodwill valuations (both corporate and non-corporate) are now undertaken by SAV.

Non-corporate goodwill valuation requests are in the main referred to SAV by Risk and Intelligence Service (RIS). In these cases the request is pre-enquiry for an informal opinion on the value claimed. SAV Risk Assessors will consider the valuation and report to RIS on the lines that either:

  1. The valuation can be accepted
  2. The valuation is either an under or over valuation and supply their opinion of Open Market Value
  3. Inform RIS that they have insufficient information upon which to form an opinion

In the case of a response under 2 or 3 above, RIS will issue a Standard Intelligence Package to Individuals & Public Bodies (I & PB) who in due course will raise an enquiry and refer the matter back to SAV for an agreed valuation.

Non-corporate goodwill valuation requests may also be received in SAV direct from the Instructing Office for example I & PB, Capital Gains Units, High Net Worth and Affluent teams.

Corporate Goodwill valuations will be received in SAV direct from the Instructing Office and may be in the form of informal or formal requests.

Upon receipt of Goodwill requests involving Trade Related Property, SAV will liaise with the Valuation Office Agency specialists in the Land Portfolio Valuation Unit.

It is possible that in settling a company’s Corporation Tax liability on the disposal of its assets, a value for goodwill may have been agreed either by the Inspector or SAV, on acquisition and/or at 31 March 1982. If a share valuation at the same date is required and is calculated by reference to a whole company value, we may well be bound by the previously agreed value for goodwill. In this situation you should obtain any PSV file that was created in respect of the goodwill valuation. The value of the company is not necessarily arrived at by simply adding the goodwill value to the value of the net tangible assets, if that entirety value is not supported by earnings.

In some instances, a value for goodwill could only be achieved by selling off the benefit of the trade away from the other assets of the business, leaving only a shell out of which costs of consequent redundancies/liquidations have to be met. Deduction for those could be a legitimate reduction from the total value of the separate assets, including goodwill. 

  Additional Guidance: SVM150000