A typical home buyer’s report focuses on physical defects and aims for a conservative value. Tax valuations, on the other hand, need to be much more detailed. Their goal is to convince a third party – the District Valuer.
Property valuations for tax purposes need to demonstrate both evidence and a rationale. Include these two elements, and you will dramatically reduce the risk of the District Valuer querying your valuation.
A complication with Inheritance Tax: ‘Hope Value’
The Upper Lands Tribunal has ruled that Section 160 of the Inheritance Tax Act 1984, which outlines how a property should be valued, should include ‘Hope Value’. This refers to the increase in value that comes with the potential for future development or alteration.
If your property has potential for future development, the valuation must include this from the start. This transparency may prevent the District Valuer from disputing the report valuation. Many valuers fail to reflect this in their valuations – they rely solely on the Royal Institute of Chartered Surveyor’s ‘Red Book’ definition of market value, which does not include ‘hope value’.
At Simon Bradley & Co., we have advised numerous clients where the District Valuer disputed a probate valuation and sought to value the property at a much higher sum.
When the District Valuer disputes your valuation.
Let’s look at a couple of case studies.
In one instance, the District Valuer inflated the property’s value, arguing that the property had development value or hope value. To reduce the liability, we carried out a detailed development residual valuation and demonstrated that the tax liability should be some 20% lower.
Another case involved a property with registered Rent Act tenants. By analysing market yields, we convinced the District Valuer to lower the valuation by 40%.
Where a valuation is being disputed, it can be helpful to involve a new valuer who can approach the case with fresh eyes. This is where we come in. Using our experience and property know-how, we’ll help by providing a solid valuation rationale and negotiating a lower sum with the District Valuer.
Valuation expertise
If you need an Inheritance Tax valuation or are facing a dispute over a previous valuation, we’ll be happy to explore areas where we can help. We’re here to support you in securing a fair and accurate valuation, potentially saving you a significant amount on inheritance tax and a lot of stress.
Or call – +44 (0)207 101 4550
