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The procedures detailed in the following paragraphs are designed to provide the instructing Inspector valuation advice in connection with:
- a not negotiated valuation that may be used by the Inspector in deciding whether a formal enquiry should be opened on a Self Assessment return
- following the opening of an enquiry a not negotiated valuation so the Inspector can decide if there is tax effect in a particular case
- a negotiated valuation where the Inspector has decided that the value under consideration needs formal agreement so that the tax liability may be established
- an opinion, either not negotiated or agreed, of a valuation submitted by a taxpayer in advance of a self assessment return being submitted under the Post transaction Valuation Check procedure (see para 128 et seq)
- through the LPVU the agreement of 1982 Portfolio valuations (see para 6.135 et seq).
There are strict rules governing the circumstances in which an Inspector may formally open an enquiry into a self assessment return.
Contact with taxpayers by the DV could be construed as the formal opening of SA enquiries and could lead to a compromise of the Inspectors statutory position. Therefore, unless expressly authorised to do so, DVs must not contact the parties for information about any property to be valued. Should the DV be authorised to approach the parties, ie. by being asked to negotiate values, the opening letter must make it clear that the approach is not to be treated as the opening of an enquiry unless the instructions from the Inspector advise otherwise.
In addition where references are made under the PTVC procedure care must be taken to ensure that taxpayers who fail to meet their statutory obligations with regard to time limits for filing their return, and thereby may incur penalties, cannot point to the VOA as a cause of that failure.
Inspectors, which for the purpose of these instructions include references from the LPVU, may ask DVs to give the following advice when needed in respect of Capital Gains Tax:
- not negotiated opinions of value
- agreed valuations
- advice as to whether or not development value is reflected in the consideration for a disposal
- apportionments of acquisition costs, disposal proceeds or valuations.
This Section explains the general procedure to be adopted in such cases. For cases involving claims for Private Residence Relief reference should be made to Section 8.
The DV may seek advice on questions of principle or legal interpretation from CEO.
With the exception of references from Inspectors in connection with Post Transaction Valuation Checks, and Property Portfolio Valuations, see part 7 of this Section, DVs must not enter into any form of prior agreement of property values which may be required to calculate a CGT liability. Consequently DVs must not engage in any discussions, negotiations or agreements with taxpayers or their agents concerning CGT before receipt of a case reference in respect of the property involved.
Taxpayers making enquiries before a case has been received by the DV should be advised to contact the Inspector of Taxes to whom that taxpayer's tax returns have to be submitted. The Inspector can then, if necessary, submit a request for advice to the DV.
Except when negotiating cases no discussion on values should be entered into with taxpayers or their representatives either formally or informally.
Various time limits have been agreed with the Inland Revenue as part of the Service Level Agreement. They are referred to in detail in the instructions in this Section but a summary of their application is set out in tabular form in Appendix 13. Time limits should be seen as maximums and not minimums or norms. The aim must be to deal with all casework expeditiously and not delay merely because the time limit has not been reached. Case reporting time taken is measured through the CRAC application and reports are made to the Inland Revenue on a regular basis.
Under ss.86 and 88 Taxes Management Act 1970 (as amended by the Finance Act 1989) a taxpayer is liable not only for interest on unpaid tax but also for interest on a greater liability which arises due to an error in a tax return. In the latter case an amendment to a value which has been returned is defined as an "error" in the context of the legislation. (This does not necessarily imply that the valuation itself was in error or represent any comment on the valuation process.)
DVs must therefore ensure that they cannot be said to have contributed to delays in dealing with cases and every effort must be made to adhere to the time limits laid down.
All casework should be regularly monitored to ensure that:
- simple cases are reported quickly
- requests for information are made promptly
- any difficult points of principle or law are referred for advice in accordance with para 6.4 above
- where a negotiation case cannot be agreed the unagreed/DOA procedures are implemented without further delay.
The Accounts Office Review Unit (AORU) considers cases where a taxpayer objects to paying interest on tax due, alleging unreasonable delays on the part of the Inland Revenue.
If the DV has been involved in a case the AORU will ask CEO for a report on the circumstances. CEO will ask the DV for a diary of action and a brief report to be forwarded within 5 working days together with the case file, from which papers should not be removed so that an objective assessment may be made of the DVs involvement in the case.
An enquiry may be received from an Inspector seeking information as to whether the taxpayer, in his dealings with the DV, has persisted with a patently unrealistic valuation, or deliberately procrastinated. DV's may respond with the information sought but if:
- the DV is in any doubt or
- the case is one where, because dealings have been particularly sensitive, unpleasant or protracted, there is a possibility of a subsequent complaint
- the DV should first consult the Customer Service Manager for the Group within which the property is located.
Occasionally taxpayers may seek compensation for extra or unnecessary expenditure on professional fees incurred as a result of the DV's handling of a case. Any such claim has to be carefully considered against the principles set out in the VOA booklet "Mistakes by the Valuation Office". Reimbursement is only appropriate when additional costs have been incurred as a result of serious delay, a serious error, a persistent error or a multiplicity of errors which go beyond a mere error of judgement.
If a claim is received by the DV it should be forwarded immediately to the Customer Service Manager for the Group within which the property is located.