Valuations may be required not only as at the date of death but also at the date of any lifetime transfer, especially any transfer within the seven years preceding the date of death known as a failed “Potentially Exempt Transfer “ (PET).
For others, their first contact will relate to Capital Gains Tax (CGT) following disposal of a property where “Rebasing” applies. Disposals of non owner occupied residential property may require a valuation as at 31st March 1982 or at a later date especially if acquired in a transaction between connected parties. Such transactions are referred to as “Not at Arm’s Length” (NAL).
So who is the District Valuer?
The function of District Valuer (DV) is carried out within the Valuation Office Agency (VOA), an executive agency of HMRC. The holder of the title DV for a locality will have a team working under him/her to which work is delegated and then allocated to a valuer within that team.
The valuer (or at least their close supervisor) will be a very well trained and qualified specialist in valuations for taxation purposes, supported and instructed on technical issues by a highly proficient head office team responsible for maintaining consistency and protecting points of principle.
Conscious of its power and responsibility, HMRC recommends that taxpayers should submit valuations from a qualified independent valuer who meets Royal Institution of Chartered Surveyors (RICS) or equivalent standards. Our recommendation is to instruct a chartered surveyor who is not only a RICS Registered Valuer, but also fully conversant with valuations for taxation purposes.
Valuations are first audited and if there are omissions of fact or errors in valuation the DV will adopt “revenue favourable assumptions” and issue his/her own valuation.
At this point it is vital (if you did not originally do so) that you appoint a suitably skilled and experienced chartered surveyor. For a VOA valuer there is no finer sport to be had than a “property professional” who has prepared taxation valuation without adequate knowledge.
The most common mistakes are as simple as using the wrong definition of value, not valuing in accordance with the facts (particularly as regards tenancies) or, at worst, submitting a report clearly intending to mislead or deceive. Taxation valuations have been in the spotlight recently due to changes to CGT rules for residential property. The changes affect Non Resident Owners and many valuers have, since March of this year, been busy preparing rebasing valuations as at 6th April 2015.
In general, where property is transferred between connected parties (especially with a view to future tax planning) or there is a base date at which a valuation might be required on eventual disposal of a property, it is important to obtain a formal valuation from a competent and experienced RICS qualified valuer as soon as possible to ensure that any valuation is as accurate as it can be to minimise the risk of unexpected future costs. If, from the outset, you are not at least as well represented as HMRC, you are at a considerable disadvantage
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