We prepare valuations of businesses and shares for tax purposes, applying the statutory definition of market value and documenting the reasoning so that your tax adviser can submit it with confidence. We provide the valuation; your tax adviser provides the tax advice. Keeping those roles separate protects both.
When is this valuation required?
- Shares are gifted or transferred between connected persons and a capital gains tax value is needed.
- A shareholder has died and the estate holds private company shares or a business interest.
- A lifetime gift of shares may be relevant for inheritance tax.
- Shares are acquired by or issued to employees and employment tax depends on their value.
- A company reorganisation needs values for the shares or businesses involved.
- HMRC has opened an enquiry into a valuation already submitted.
Who instructs us?
- Accountants and tax advisers on behalf of clients
- Private client and probate solicitors
- Executors, trustees and shareholders
- Companies and their finance teams
What exactly is valued?
Tax valuations usually concern a specific shareholding, not the whole company. The legislation generally requires the actual holding to be valued as it is, which means its size, the rights attached and the restrictions on its transfer all matter. Where the holding forms part of a larger group of related holdings, special rules may apply; we confirm the position with your adviser.
How is value assessed?
For capital gains tax and inheritance tax, market value is generally the price the asset might reasonably be expected to fetch on a sale in the open market. For unquoted shares, the buyer is assumed to have the information a prudent prospective purchaser might reasonably require if buying from a willing seller at arm's length. These assumptions shape the valuation as much as the company's results do.
We value the company, then the holding, applying adjustments for the lack of control and marketability where the facts support them, and record each judgement with its supporting evidence.
How the approaches are usually weighed
Typical
- IncomeMaintainable earnings or discounted cash flowUsual starting point
- MarketComparable transactions and companiesCross-check
- AssetAdjusted net assetsWhere relevant
The valuation date
Tax valuations are prepared at the date of the relevant event, such as the date of a gift, a disposal or a death, and only information that was known or reasonably knowable at that date should be taken into account. That is why historic valuations need care: hindsight about how the business later performed should not be allowed into the analysis.
If HMRC challenges the valuation
Valuations of unquoted shares may be referred to HMRC's Shares and Assets Valuation team, which can ask questions, request further information or propose a different figure. A well-documented valuation makes that conversation more focused. We can assist your adviser with responses, further analysis and discussions with HMRC.
We cannot promise that HMRC will agree a valuation. What we can do is make sure it applies the correct basis, is supported by evidence and explains its reasoning clearly.
What factors influence the result?
- Statutory basis
- Market value as defined for the particular tax, including assumed information.
- Size of holding
- Control thresholds, and whether the holding is part of a related larger interest.
- Transfer restrictions
- How the articles affect a hypothetical sale.
- Information known at the date
- Excluding hindsight about later events.
- Dividend record
- Particularly relevant for small minority holdings.
What information is required?
- Details of the event and its date (gift, transfer, death or acquisition)
- Accounts and management information around that date
- Articles of association and shareholder agreements
- The share register at the relevant date
- Any correspondence with HMRC
We send a tailored information request once the scope is agreed.
What report will you receive?
Tax valuation reports state the basis of value, the valuation date, the information relied on, the approach and the conclusion, with enough analysis to support the figure if HMRC asks questions.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
Straightforward tax valuations of a holding in a single trading company can usually be completed within a few weeks of receiving information. Historic valuation dates may need extra time to reconstruct the information that was available.
How much does it cost?
Fees depend on the company, the holding and whether the matter is a routine filing or an active HMRC enquiry. We confirm the scope and fee in writing.
How our fees are set →Frequently asked questions
Why would HMRC need a valuation?
Because certain tax charges are calculated on market value rather than on the price actually paid. Gifts, transfers between connected persons, assets held at death and some employee share acquisitions are common examples.
Will HMRC accept your valuation?
HMRC may accept it, ask questions or propose a different value. No valuer can guarantee agreement. A clear, evidenced valuation on the correct basis gives the best basis for discussion.
Do you give tax advice?
No. We provide the valuation. Your accountant or tax adviser advises on the tax consequences, reliefs and filing. We work closely with advisers to make sure the valuation answers the question the tax rules ask.
Can you value shares at a date several years ago?
Yes. Retrospective valuations are common in tax matters. We use information that was available at the valuation date and avoid relying on hindsight.
What is the Shares and Assets Valuation team?
The part of HMRC that considers valuations of unquoted shares and certain other assets for tax purposes. It may review valuations submitted with returns or in enquiries.
Is a tax valuation the same as a valuation for sale?
Not necessarily. Tax valuations apply statutory assumptions about the market and the buyer that may differ from the circumstances of an actual sale.
