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HMRC internal manual

Shares and Assets Valuation Manual

HM Revenue & Customs
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Information Standards: Supplementary Information

The following is not an exhaustive list but provides some indication of the type of supplementary information that might reasonably be required by a prospective purchaser. It is based on evidence given by expert witnesses in the Lynall case.

But the extent to which any of them are appropriate in a case must depend on an objective consideration of all the circumstances of the particular valuation:

  1. in a trading company the current trading position including interim figures for turnover and profits which were available to the directors at the valuation date. Also the views of the directors on the prospects for the remainder of the trading year then current (based perhaps on the size of the order book as compared with the corresponding figure for the previous year).
  2. in an investment or property investment company, details of the portfolio of securities or properties. But again, just to reinforce the message, common sense has to be applied to what might be reasonable in the circumstances. For example, if a property company owns only two or three properties, then all purchasers would receive such information. But it might be different if we are valuing a tiny holding and the company owns hundreds of properties.
  3. in a farming company, the location and acreage of the land and details of tenancies.
  4. the dividend prospects and policy.
  5. the prospects of any imminent or contemplated flotation, quotation, merger, take-over, liquidation or other transaction which might enhance the value of the shares or the return from them in the shareholders’ hands. If any of these matters were in prospect or contemplation, then further particulars of the precise stage achieved and advice received at the valuation date might reasonably be required, depending on the facts.

Other occasions when supplementary information is required

In the case of recently incorporated companies where there are no published accounts or other indications of value then sufficient information to enable a value to be placed on the shares, for example latest available trading figures and details of assets and liabilities.

Where the latest published accounts are old (or stale), then the valuer should consider obtaining details of prepared but as yet unpublished accounts. It may also be reasonable for management accounts to be considered in appropriate cases.

  Additional Guidance: SVM150000