Valuing Estate Question

george4064

My Father died a few months ago and he owned about 33% of shares in a Private Limited Company that he was a partner at. He was employed by the company and paid via PAYE.

We need to apply for probate and complete the IHT400 form. However the process in which we put a value of the shares is open to debate, since there is no open market for them.

HMRC does provide some guidance and the Solicitors are willing to do the legwork for a hefty fee. However, since the shares are simply going into a Trust and no IHT is applicable, I don't think we need to spend thousands just to get a very rough estimated value just so we can fill in the IHT 400 form.

Furthermore, I am in communication with the managing partner of the company so I should be able to quite easily obtain the necessary information such as financial, assets etc.

So my question is, does anyone have prior experience of doing this and is able to share some wisdom?

Many thanks in advance for all and any of your help and guidance

tacpot12

Sorry, I've got no real experience of the situation, but I know when businesses are sold, a common metric for the sale price is some multiple of the annual profits. If you can find some good evidence for a specific multiplier, then along with information thtat the managing partner can provide you with, you should be able to get a value for the shares.

Hoenir

Is there a shareholder agreement in place or something written into the company's articles. As to what happens when a shareholder dies. 

Keep_pedalling

There should be no problem in providing an estimated value for an estate that IHT is not due. I would have thought these shares would qualify for 100% business relief so HMRC are not going to be taking too close a look at the valuation if that is the case.

polar_pig

If the company accounts have been submitted recently, you might be able to get a good idea by looking them up here:

https://find-and-update.company-information.service.gov.uk/

Read the Balance Sheet and look for "Shareholders' Funds" or "Total Assets Less Current Liabilities" then multiply this figure by the percentage shareholding. Alternatively the accountant/bookkeeper or accounts department might be able to get a figure for the value at date of death from their accounts software.

user1977

Or perhaps more relevantly, what are you expecting the estate to actually receive for the shares?

george4064

user1977 said:

Or perhaps more relevantly, what are you expecting the estate to actually receive for the shares?

Not sure what you mean by this question?

The shares are to be put into a Trust, so there won't be any cash transfers.