RICs valuation v HMRC

Yorkshireman99

lincroft1710 wrote: »

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.

All very well but generalisations in these circumstances are not always helpful/. I can only rep[at that the starting point for an individual case is always with the original surveyor. I cannot see any other logical solution.

Tom99

Yorkshireman99 wrote: »

All very well but generalisations in these circumstances are not always helpful/. I can only repeat that the starting point for an individual case is always with the original surveyor. I cannot see any other logical solution.

[FONT=Verdana, sans-serif]I agree, a year delay is long enough for a inflationary price increase to have occurred.[/FONT]
[FONT=Verdana, sans-serif]The surveyor may well have a number of strong comparable sales close to the valuation date which support the original figure and which point to price inflation making up the £275k difference.[/FONT]
[FONT=Verdana, sans-serif]On the other hand the surveyor may have had very poor comparables with nothing similar to the subject property sold close to the valuation date. In that case the sale of the subject property, even though a year after the valuation date, becomes a much stronger comparable and the surveyor forced to reconsider the original valuation in the light of this new evidence.[/FONT]
[FONT=Verdana, sans-serif]The OP does not say what the sale price was so the %age increase £275k represents is not clear. If it is only a 5% or 10% increase, the case for an inflationary increase is quite reasonable, but if the increase is 50% it would be very much harder to justify.[/FONT]

Tom99

lincroft1710 wrote: »

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.

[FONT=Verdana, sans-serif]If a sale occurs within 4 years of death, at a lower figure than the value at date of death, then the taxpayer has a automatic right to substitute the actual lower sale price for the previously agreed date of death value and pay IHT on the lower amount.[/FONT]

[FONT=Verdana, sans-serif]That is not the same thing as saying the agreed open market value at date of death is wrong but only that there has been a fall in value between the two dates.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]The reverse is not true. HMRC/VO do not have an automatic right to substitute a higher actual sale price achieved after the valuation date. However a sale close to the valuation date will be very strong evidence, so proving a lower value when a sale had taken place within a month or two would be hard to do. After a year the link is less so unless it can be shown the market was flat over that period.[/FONT]

theoretica

I believe that it is fairly easy to get hold of data showing how local house prices have changed, on average, over a given time. What are they showing compared to the two values in this case? If average house prices have changed 25% in a year and HMRC are arguing value a year ago should be determined by price now then this seems worth pointing out to them.

lincroft1710

The VOA have details of virtually every property sale in the country, so if OP appeals and HMRC refers the case back to the District Valuer, it should be possible to see how house prices rose between dates of death and sale.

I did not say that HMRC had an automatic right to substitute a higher actual sale price, merely that it would be their starting point for finding the correct value at the date of death.