CGT - issue with low probate value

Ebenezer_Geezer

Hi,

Hope someone can assist with a CGT/probate questions as HMRC are bouncing me between departments. 

I have inherited a 1/3 share of a residential property with the deceased having passed away in 2014.

The property was/is still well under IHT thresholds and therefore a non-ascertained estimate valuation was submitted during the probate application by the administrators. Having  checked over the relevant IHT form, the guidance does state that only an estimate is required.

Probate was granted with a valuation of £50k. This however undervalued the property somewhat, which was seemingly worth anywhere from £65k to £85k in 2014 (there is however no RICS valuation). This was not due to an attempt to affect IHT, as the property is well below IHT thresholds but rather a lack of professional knowledge and due to the guidance on the form.

The property was recently sold for just over £100k with a Deed of Appropriation in place.

It has now become apparent that using the low £50k estimate given during probate means that even with this deed in place, the sale would still be subject to CGT as it would reckon as a £50k gain.

My questions are:

1) When calculating my CGT liabilities, do I have to use the non-ascertained estimate probate value or the fair open market value at the time it was inherited in 2014. 

2) If I use fair market value, there is little or no CGT due and therefore I understand that I would not need to submit a CGT return but would this be questioned by HMRC who already have the £50k estimate from the probate IHT form. 

If so, how can I evidence the true value without a retrospective RICS valuation (the property has sold so not possible) and how do I go about raising the issue?

3) I understand that HMRC do offer a free CGT valuation check and that I can submit this request and a estimated CGT return within 30 days without penalty. Might this be a suitable approach in this instance?

Any other constructive thoughts/suggestion welcome. 

Thanks for taking the time to help. 

-Eb

Jeremy535897

Unless the value was ascertained for inheritance tax, you are not bound to use it for capital gains tax, but the onus will be on you to support your claim to amend the value. I have never used the free valuation check so cannot comment.

You should have submitted a return within 30 days of completion if any tax was due:
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

You will need to file a self assessment tax return including the gain, even if there is no tax, as the proceeds exceed £49,200.

[Deleted User]

Jeremy535897 said:

Unless the value was ascertained for inheritance tax, you are not bound to use it for capital gains tax, but the onus will be on you to support your claim to amend the value. I have never used the free valuation check so cannot comment.

You should have submitted a return within 30 days of completion if any tax was due:
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

You will need to file a self assessment tax return including the gain, even if there is no tax, as the proceeds exceed £49,200.

The op’s share of the proceeds is only £33333 and, if the lower figure if £65000 is used and sales costs are deducted, unlikely to be any liability. Really strange why £50000 was used as probate value but, what’s done is done!

Jeremy535897

[Deleted User] said:

Jeremy535897 said:

Unless the value was ascertained for inheritance tax, you are not bound to use it for capital gains tax, but the onus will be on you to support your claim to amend the value. I have never used the free valuation check so cannot comment.

You should have submitted a return within 30 days of completion if any tax was due:
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

You will need to file a self assessment tax return including the gain, even if there is no tax, as the proceeds exceed £49,200.

The op’s share of the proceeds is only £33333 and, if the lower figure if £65000 is used and sales costs are deducted, unlikely to be any liability. Really strange why £50000 was used as probate value but, what’s done is done!

Thanks. I missed the one third bit in such a long post.

Ebenezer_Geezer

Jeremy535897 said:

Unless the value was ascertained for inheritance tax, you are not bound to use it for capital gains tax, but the onus will be on you to support your claim to amend the value. I have never used the free valuation check so cannot comment.

You should have submitted a return within 30 days of completion if any tax was due:
*

You will need to file a self assessment tax return including the gain, even if there is no tax, as the proceeds exceed £49,200.

Jeremy/Purdy, Many thanks to you both. 

Jeremy, ignoring the valuation check service for the moment, do you have any idea how this might be amended? 

If there is no CGT liability from the ‘true’ valuation then I understand that no CGT form would need to be submitted? But would this be a case of waiting to see if  HMRC wanted to question it? I’d prefer not to do that as obviously I want it to resolved and to be upfront with them, but having spoken to three different people now, I don’t seem to be able to find the right person/department.  

Jeremy535897

If you want some degree of certainty, complete a self assessment tax return with the details on it, and explain how you have arrived at the valuation in box 54, and tick box 53.