Market Value at Death - Do Not Be Intimidated
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Published on 22nd
recent case heard
before the Lands Chamber “Linda Frances
Chadwick and another” (Hobart’s
Executors)” was won
taxpayer. This case
gives hope to the
importance of fighting genuine market value for figures for property
date of death. Inheritance
purposes in good faith and with strong research.
Based Penalty Regime
behaviour based penalty
regime was introduced by Schedule 24 FA 2007 from 1 April
2008. Schedule 40 FA 2008
extended the behaviour
based penalty regime introduced in Schedule 24 to IHT from 1 April 2009.
are many who
have seen a much more aggressive approach by HMRC since the
introduction of the
penalty regime. What
are the facts of
executors of a will disputed
HMRC’s valuation of the deceased’s property.
Shortly after the deceased died, the executors obtained
two local estate agents, both of whom valued it at £250,000.
The property was
subsequently refurbished and
was then used as a holiday home.
a year later – and after the
refurbishment – HMRC visited the property and proposed a value of
appellants sent HMRC a
detailed report in support of their valuation, in light of which the
said he would compromise at £275,000.
taxpayers’ appealed against
this valuation and were forced to go to a tribunal.
tribunal judge noted that the
deceased had bought the property privately, rather than on the open
market. Thus the
purchase price, which
was £268,450 did not conform to the definition of market value in IHTA
s.160, and should not have been taken into account by HMRC in arriving
judge decided to use sales of
similar properties, also used by HMRC, to reach a conclusion.
The more expensive of
these was in a
different village from the property under appeal, which made a
difficult, however the other two led the judge to agree with the
valuation of £250,000.
taxpayers’ appeal was
this victory for
the taxpayer Inheritance Tax at stake must have been £10,000.
The calculation is
£275,000 - £250,000 =
£25,000 @ 40% = £10,000. There
who might consider that this was a relatively low amount of tax over
stand firm and debate the matter at Lands Tribunal.
the case is considered to show is the need to encourage the District
visits as soon after death as possible and to ensure that there is
photographic, etc, of the state of the property at the date of death
record and detail refurbishments.
valuation is an area that HMRC are known to look at closely, e.g. under
valuations when there are no IHT reliefs available and over valuations
there are reliefs available. The
is so that the beneficiary will start with as high a base cost as
reality is that
on farms and estates for example where there is a dispute over the
value of the
property and eligibility
Business Property Relief (BPR) on some property included in the Estate,
let property, hope value and buildings used for non-agricultural
there is often a “deal” offered by HMRC of a payment of IHT to settle
the case. Sometimes
executors and beneficiaries who are
involved in the decision making are exhausted or confused or simply
wanting to “move on” and to be able to close the case and use the
property. It is
fair to say that they
are often very vulnerable and a deal appears an easy solution.
emphasises the need to fight every decision where there are valid
good evidence has been obtained, even if the tax saving is £10,000.
About the Author
Article supplied by Julie
Butler F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire,
01962 735544. Email;
Julie Butler F.C.A. is the author of Tax
Farm and Land Diversification ISBN: 0754517691 (1st
ISBN: 0754522180 (2nd edition) and Equine
Tax Planning ISBN:
third edition of Tax
Planning For Farm and Land Diversification will be published
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Article Published/Sorted/Amended on Scopulus 2010-10-22 12:54:56 in Tax Articles