RICs valuation v HMRC

hygge123

We had probate granted a few months ago, and have sold my late father's house; which means we are now in a position to be able to pay the remainder of the IHT tax due. Soon after he died, we paid for a RICs valuation, and almost a year later, sold the house. We were very lucky, and sold it for a lot more than it was valued for - nearly £275k more, and not surprisingly, HRMC are saying the original valuation was wrong, and the price we sold for was within a few K of what it was worth. Obviously this has big tax implications for us, and we have told our solicitor that we would like to appeal the decision by HMRC. He seems to think its not worth appealing, despite me sending him a long email with why we think its worth appealing, including the fact that our buyers were desperate to buy a house in our road (a very desirable part of Oxford), and having checked on Right Move, plenty of properties in the area were going for around the original valuation at the time we had the house valued. He has agreed to go back to the RICs valuer to ask how they came to that price, but its hard work to get him to do any more.
I was just wondering if its easy to appeal this kind of thing independently, or should we use a professional tax specialist to help us? Our solicitor is quite inefficient, and I can't help feeling he just wants to wrap up the whole case soon; but the difference in tax between paying CGT at 28% and IHT at 40% could be £30K, which to us is a huge sum of money. Surely its worth appealing, or do HMRC simply insist they are correct? Just wondering what people on this forum think?

Yorkshireman99

hygge123 wrote: »

We had probate granted a few months ago, and have sold my late father's house; which means we are now in a position to be able to pay the remainder of the IHT tax due. Soon after he died, we paid for a RICs valuation, and almost a year later, sold the house. We were very lucky, and sold it for a lot more than it was valued for - nearly £275k more, and not surprisingly, HRMC are saying the original valuation was wrong, and the price we sold for was within a few K of what it was worth. Obviously this has big tax implications for us, and we have told our solicitor that we would like to appeal the decision by HMRC. He seems to think its not worth appealing, despite me sending him a long email with why we think its worth appealing, including the fact that our buyers were desperate to buy a house in our road (a very desirable part of Oxford), and having checked on Right Move, plenty of properties in the area were going for around the original valuation at the time we had the house valued. He has agreed to go back to the RICs valuer to ask how they came to that price, but its hard work to get him to do any more.
I was just wondering if its easy to appeal this kind of thing independently, or should we use a professional tax specialist to help us? Our solicitor is quite inefficient, and I can't help feeling he just wants to wrap up the whole case soon; but the difference in tax between paying CGT at 28% and IHT at 40% could be £30K, which to us is a huge sum of money. Surely its worth appealing, or do HMRC simply insist they are correct? Just wondering what people on this forum think?

HMR&C will have asked the district valuer to establish the value at the date of death.Since you did the right thing by getting a RICS valuation. making an appeal without using a professional is unlikely to succeed. Given the potential cost a few hundred pounds to a new surveyor, ssuming the original one will not help has to be worth the price. Valuations are seldom accurate to within 10%.

Tom99

[FONT=Verdana, sans-serif]The original RICS surveyor should be prepared to defend the original valuation if they still believe it to be correct particularly if there is nearby comparable properties sold at around the valuation date.[/FONT]
[FONT=Verdana, sans-serif]You need to press your solicitor quite hard on that because, as you say, a substantial sum is involved.[/FONT]

[FONT=Verdana, sans-serif]Have you prepared a detailed CGT calculation? It is not just the difference between 40% and 28% tax rate because the CGT calc can deduct sale costs, the annual allowance and the cost of obtaining probate based on a %age of probate value.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]Is more than one beneficiary involved? If so was the beneficial interest transferred to the beneficiaries before the sale in order to reduce the CGT bill?[/FONT]

SeniorSam

The original RICS valuer hold the responsibility. His valuation was used for the calculation of IHT and IF he were wrong, then it is his responsibility to pay the excess tax. He has a duty to support you against the HMRC.

Sounds like your solicitor is a 'wimp' and like you say, just wants to get it finished so his fees are secured. Do not let it lie there. Your solicitor should have already dealt with this with a very strong letter to the RICS agent and possible legal action. After all, the RICS agent has legal insurance to protect his valuation so it would probably be the insurance company to pay. If the solicitor is not prepared to act that I suggest you do not pay his fees and report him also.

Tom99

SeniorSam wrote: »

The original RICS valuer hold the responsibility. His valuation was used for the calculation of IHT and IF he were wrong, then it is his responsibility to pay the excess tax. He has a duty to support you against the HMRC.

Sounds like your solicitor is a 'wimp' and like you say, just wants to get it finished so his fees are secured. Do not let it lie there. Your solicitor should have already dealt with this with a very strong letter to the RICS agent and possible legal action. After all, the RICS agent has legal insurance to protect his valuation so it would probably be the insurance company to pay. If the solicitor is not prepared to act that I suggest you do not pay his fees and report him also.

[FONT=Verdana, sans-serif]The poor surveyor has not even been asked to act yet![/FONT]
[FONT=Verdana, sans-serif]You would not get anywhere with trying to claim £30,000 from the surveyor even if it turned out the valuation should have been £275,000 higher.[/FONT]
[FONT=Verdana, sans-serif]The client has not lost anything, in fact they are £165,000 better off (£275k*60%)[/FONT]
[FONT=Verdana, sans-serif]The only thing you could claim for is a bit of inconvenience and a refund of the fee paid.[/FONT]

SeniorSam

Sorry, but I disagree. The Surveyor has been paid for a valuation for Probate and is RICS qualified. That qualification makes him responsible, which is why he has to have insurance in his profession in order to operate. If it can be shown that the valuation was incorrect, according to the HMRC valuers, then he is to blame for the error and can be held responsible. He will have to rely on his insurance, who will no doubt fight the case that HMRC are making if the valuation is incorrect.

There is nothing personal about such actions, it is simply business and why the public seek an RICS qualified surveyor against someone not qualified. Would the surveyor not wish to defend his figures?

Yorkshireman99

Tom99 wrote: »

[FONT=Verdana, sans-serif]The poor surveyor has not even been asked to act yet![/FONT]
[FONT=Verdana, sans-serif]You would not get anywhere with trying to claim £30,000 from the surveyor even if it turned out the valuation should have been £275,000 higher.[/FONT]
[FONT=Verdana, sans-serif]The client has not lost anything, in fact they are £165,000 better off (£275k*60%)[/FONT]
[FONT=Verdana, sans-serif]The only thing you could claim for is a bit of inconvenience and a refund of the fee paid.[/FONT]

Just plain wrong. Thesurveyor IS resonsible and has been paid a fee to do provide an accurate valuation. As Senior Sam says they are obliged to defend it.

Tom99

Yorkshireman99 wrote: »

Just plain wrong. Thesurveyor IS resonsible and has been paid a fee to do provide an accurate valuation. As Senior Sam says they are obliged to defend it.

[FONT=Verdana, sans-serif]I agree with both of you that the surveyor has a professional responsibility and could be sued for negligence if it could be shown that they had not taken enough care, as would be expected of a professional, in arriving at their valuation.[/FONT]
[FONT=Verdana, sans-serif]What I was disagreeing with is that the client would be able to claim a loss of £30,000.[/FONT]
[FONT=Verdana, sans-serif]The client has not loss £30,000 on the contrary they are better off by £165,000.[/FONT]
[FONT=Verdana, sans-serif]If they had sold the property for £275,000 less than it was worth based on the surveyors valuation then they would have a loss they could claim for.[/FONT]
[FONT=Verdana, sans-serif]The surveyor has not yet even been asked to defend their valuation, which they would normally do, and may even have quoted a fee for doing so when taking on the work in the first place.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]If I was the OP I would bypass the solicitor and get in touch with the surveyor directly.[/FONT]

[FONT=Verdana, sans-serif]There is no point suing someone for negligence unless you have made a loss you need to be compensated for because you relied on that advise.[/FONT]

lincroft1710

A sale price is a very good indication of a property's value at a particular point in time. Far better than a valuation. Thus HMRC will seek to adopt this figure as the basis for calculating the the value for IHT purposes.

If the surveyor had valued the property at say £250K more than they had done, the OP would not be any better or worse off. The estate is worth more than originally thought and although attracts more IHT, the beneficiaries will have a larger inheritance.

You can appeal HMRC's valuation, but as I said in my 1st para, the sale price is a very good indication of a property's value.

Yorkshireman99

lincroft1710 wrote: »

A sale price is a very good indication of a property's value at a particular point in time. Far better than a valuation. Thus HMRC will seek to adopt this figure as the basis for calculating the the value for IHT purposes.

If the surveyor had valued the property at say £250K more than they had done, the OP would not be any better or worse off. The estate is worth more than originally thought and although attracts more IHT, the beneficiaries will have a larger inheritance.

You can appeal HMRC's valuation, but as I said in my 1st para, the sale price is a very good indication of a property's value.

You simply don't know what the value at date of death is. Your advice is simply wrong. The OP needs to talk to the surveyor first.

lincroft1710

Yorkshireman99 wrote: »

You simply don't know what the value at date of death is. Your advice is simply wrong. The OP needs to talk to the surveyor first.

HMRC are often asked to accept the sale price as the value for IHT purposes (I'm ex VOA and have seen hundreds of these cases) even though the date of death would be earlier. Clearly these occasions are when the sale price is lower than the submitted valuation. As the sale was less than a year after the date of death, the sale price will be a starting point in finding the value at the date of death.