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The need for a valuation of a property for the purposes of calculating an individual’s taxable income or a company's taxable profits can arise in a variety of ways. The following paragraphs describe the main occasions when HMRC may require valuation advice.
(Schedule A for Corporation Tax and Part 3, ITTOIA 2005 for income tax purposes)
HMRC may on occasions require advice from the DV on the amount of a premium received by the taxpayer or the value of works carried out by the tenant. The circumstances when advice may be required are rare and HMRC will in each case explain the reason for the request.
An example of such a request would be to calculated a deemed premium in accordance with S.34(2), ICTA 1988 which says:
“Where the terms subject to which a lease is granted impose on the tenant an obligation to carry out any work on the premises, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the landlord (in addition to any other premium) of an amount equal to the amount by which the value of the landlord's estate or interest immediately after the commencement of the lease exceeds what its then value would have been if those terms did not impose that obligation on the tenant.”
Wording to similar effect, although not identical is within S.278, The Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).
If any difficulties arise the DV should seek advice from CEO Technical Centre.
(Schedule D for Corporation Tax or Part 2, ITTOIA 2005 for Income Tax)
When a taxpayer is trading or dealing in property valuations may be required to enable the Inspector to determine the profits. The circumstances when valuations may be required are explained in detail in Part 4 of this Section.
(ITEPA 2003 & former Schedule E)
The main occasions when valuations may be required for Employment Income purposes are when:
- a property is transferred to or from an employee or director other than at market value
- accommodation is provided for an employee or director by their employer.
The valuations required for Employment Income purposes are explained in detail in Part 5 of this Section.
(former Schedule F)
When a distribution is made by transferring a property to or from a member of a company valuations may be required to determine both the recipients liability to income tax under Part 4, ITTOIA 2005 and the company's corporation tax liability.
The circumstances when valuations may be required are explained in detail in part 6 of this Section.
Valuations and apportionments may also be required to determine the amount of allowances that can be deducted from a taxpayer's income or a company's profits to arrive at the taxable income/profit. The circumstances when valuations and apportionments may be required are described in detail in Section 3.