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HMRC internal manual

Shares and Assets Valuation Manual

Inheritance Tax: Revaluation of Property Following a Sale within 3 Years of a Death - s.176 IHTA 1984

This section provides relief where, for example, the personal representatives sell the deceased’s shareholding on its own when it had been valued on death as part of a larger holding, because of, say, the related property provisions. Such claims are rarely met in practice and it is essential that in any such case you read Chapter 9 of the Inheritance Tax Manual IHTM09751. You should note in particular that the revaluation as a lesser holding is at the date of death.

Shares and Assets Valuation (SAV) is responsible for the revaluation of any such property which was previously valued at the death by SAV.

Where a claim for revaluation is made under s.176, the IHT caseworker will refer the matter to SAV by memorandum stating the shares sold, the date of sale, the gross price realised, whether related or non-vested property has also been sold and if so details of that sale. SAV may also be asked to advise whether the sale meets the requirement in s.176(3)(b) that it was at arm’s length for a price freely negotiated at the time of the sale.

Valuers should be on the alert for any indication that any other sale has taken place of shares which were part of the deceased’s ‘estate’ immediately before the death or which then constituted related property. Should it appear that such a transaction has taken place, reference should be made back to the IHT caseworker to establish whether the ‘qualifying sale’ was made in conjunction with the other sale - see Chapter 9 of the Inheritance Tax Manual IHTM09757.

Where under this provision a shareholding, previously valued as part of a control holding, is revalued as part of a minority holding, any business relief in respect of the shares sold will need to be reduced to the minority rate (for pre 6/4/96 deaths) and any agricultural relief withdrawn (See Chapter 111 of this manual SVM111000). The attention of the IHT caseworker should be directed to this when the revised value is notified.

  Additional Guidance: SVM150000