Inheritance tax manual - Section 16 - Part 3 : Procedure- formal references

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Part 3 : Procedure – Negotiated Formal References

16.50 General

Part 2 of this section set out the procedures for dealing with initial informal not negotiated references from SAV. This section sets out the procedures to be followed in formal negotiated references. These will be either:

i) Initial reference cases which are complex or sensitive and the SAV caseworker has indicated the VOA should treat the reference as a formal one (see para 16.40(3) above), in such cases, the credit type should be altered to 02 (It is important for the credit type to be altered during the life of the case and not left to reporting stage to avoid distorting the timeliness statistics).

ii) Cases where SAV indicate from the outset that a negotiated valuation is required and the valuation returned cannot be accepted at the initial sift stage. In these cases, the caseworker should convert the case from a credit type 05 to an ‘agreed’ valuation request credit type 02. (It is important for the credit type to be altered during the life of the case and not left to reporting stage to avoid distorting the timeliness statistics).

iii) Cases where a report has previously been sent to SAV in accordance with para 16.41 above or para 16.70 below and SAV have referred the case back to the caseworker requesting he/she enters into negotiations. In such instances, the original type 182 case should be re-opened, with a credit type of 03.

16.51 Misdirected cases

If, on receipt of the papers, it is found that all or some of the property to be valued is situated in another SVT sector geographical area, the procedures set out in para 16.31 above should be followed.

16.52 Papers incomplete

If the papers are found to be incomplete, the procedures set out in para 16.32 above should be followed.

16.53 Part cases

These are described in para 16.33 above.

Any necessary liaison with other caseworkers should be undertaken before a report is issued or an opinion of value is put to the taxpayer.

16.54 Multi caseworker cases within a single SVT geographical area

These are described in para 16.34 above

Any necessary liaison with other caseworkers should be undertaken before a report is issued or an opinion of value is put to the taxpayer.

16.55 Acknowledgements

If the case falls within category (i) of para 16.50 above, an acknowledgement should already have been sent (see para 16.35 above); however, if the caseworker has changed, SAV should be advised of the new caseworker’s details. In all other cases an acknowledgement must be sent by email to mailpoint.a@hmrc.gsi.gov.uk within 10 working days of receipt. The SAV reference and the name of their issuing caseworker should be included in the email.

The acknowledgement should include the following:

  • the SAV reference;
  • the company name;
  • the taxpayer’s name;
  • the SAV caseworker’s name;
  • the VOA reference;
  • the VOA caseworker’s name;
  • the VOA caseworker’s telephone number

A copy of the acknowledgement and the sent email to SAV should be retained on the file, for audit purposes.

16.56 Contact with parties

The procedures outlined in Section 27 paras 27.20 - 24 should be followed.

If the parties fail to supply information it should be noted that the information gathering powers under Section 219/219A IHTA 1984 (see Section 27 para 27.22) are only available to SAV in cases where the tax involved is Inheritance Tax. The information gathering powers available in CGT cases are contained in schedule 36 Finance Act 2008.

16.57 Inspections

In formal cases SAV will normally have obtained permission to inspect the property and will provide the name of the person who should be contacted. However, as both the company and the accountable parties are under statutory liability to supply information, enquiries may be addressed to either.

Negotiations

16.58 Parties figure acceptable

Where, after inspection, the values returned by the parties can be accepted, Form VO 1165 (see Appendix 6b) should be completed, endorsing the Nature of valuation supplied as "As returned". The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

16.59 Parties figure not acceptable

When the returned figure is not acceptable, the procedures outlined in Section 27 para 27.36 should be followed, i.e. the parties should be notified of the VOA valuation using Form VO 1101 (Appendix 11).

16.60 Parties fail to respond to notification of value

If no response is received from the parties within 20 working days of notification under para 16.59 above, a reminder on Form VO 1102 (Appendix 12) should be sent.

If the parties fail to respond to the reminder within 10 working days, a report should be sent to SAV on Form VO 1165, endorsing the Nature of valuation supplied as "Not negotiated - value notified to the parties on (date)". The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

16.61 Response from the parties

Where the parties respond to the notification of value before the case is reported "Not negotiated" in accordance with para 16.60 above, one or other of the following procedures should be adopted:-

    1. f) if the parties reply in writing indicating acceptance of the valuation, the case should be reported, on Form VO 1165, endorsing the Nature of valuation supplied as "Agreed". The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).
    2. g) if the parties reply verbally indicating acceptance of the valuation, the case should be reported, on Form VO 1165, endorsing the Nature of valuation supplied as "Agreed - subject to confirmation". The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).
    3. h) if the parties do not accept the notified figure, negotiations should commence immediately. If agreement is subsequently reached, the report should be issued in accordance with sub-paras a) or b) above within the appropriate time limit (see para 16.62 below).

If a report is sent SAV in accordance with a) or b) above, a copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

Time limits

16.62 General

The Service Level Agreement with HMRC states formal SAV cases should be reported within an average time of 100 working days from the date of receipt.

16.63 Interim Reports

Interim reports on negotiations are to be sent within 60 working days of receipt (see Section 27 para 27.43 for procedure to be followed). These should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

16.64 Post Transaction Valuation Checks (PTVCs)

The interaction of this service with Self Assessment procedure is explained in CGT Manual Section 6. It should be noted that the PTVC service also applies to valuations of unquoted shares undertaken by SAV. If SAV require a valuation of the company's property they will, in their reference to the VOA, advise that the valuation is required in connection with a PTVC and indicate the date by which they require a report. If for any reason it is clear that it will not be possible to report a valuation before the date indicated then SAV should be advised as soon as possible.

Reports

16.65 Opinion of Value

Reports should be sent to SAV on Form VO 1165. The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

16.66 Supplementary opinion of value - Plant & Machinery

Where a separate valuation of plant and machinery is required in accordance with para 16.13 above, the following wording should be added to the report (under further information):

“The value of the plant and machinery at that date is £.........”

The appropriate endorsement with regard to negotiations should be added

16.67 Supplementary opinion of value - Agricultural property

Where a separate agricultural valuation of qualifying agricultural property is required in accordance with para 16.21 above and Section 9 Part 2, the following wording should be added to the report (under further information)::

“The agricultural value of the qualifying agricultural property included in the above value is £.........”

The appropriate endorsement with regard to negotiations should be added

16.68 Supplementary endorsement - Goodwill

Where, in accordance with para 16.16 above, the caseworker has been requested to provide an opinion of value of any item, which is exclusive of goodwill, the following wording should be added to the report (under further information)::

"The valuation of the property (item no...) is exclusive of goodwill".

16.69 Supplementary endorsement - Aggregation

Section 27.71 sets out the procedure to be followed in multi-property cases, where the caseworker is able to accept or agree an aggregate value of several properties without prejudice to the value of any individual property comprised therein.

In such cases a supplementary endorsement should be added to the report (under further information):

"The parties have been advised that the values attributable to the several items are not necessarily agreed".

Cases where agreement cannot be reached within time limits

16.70 Reference of cases to SAV where agreement cannot be reached

Where it has not been possible to reach agreement within the relevant time limits (para 16.52-above) for any reason a report should be sent to SAV on Form VO 1165 endorsing the Nature of valuation supplied negotiations have failed. The following information should also be included (under further information):-

    1. f) the parties’ latest figure
    2. g) a brief note of the main points of difference, but neither a history of the negotiations nor a breakdown of the valuations is necessary. If however the parties have failed to respond, SAV should be informed.

The report should be sent by email to mailpoint.a@hmrc.gsi.gov.uk (unless the papers state otherwise).

A copy of the report and the sent email to SAV should be retained on the file, for audit purposes.

Credit should be taken at this stage. Following such a report, where SAV are unable to agree a valuation of the shareholding or where the parties, who have hitherto failed to respond, have been persuaded by SAV to enter into discussions, the case may be referred back for a final attempt to agree the value of the property.

Appeal cases

16.71 General

An appeal will arise where the parties dispute any subsequent notice of determination made by SAV. It should be noted that an appeal will be against SAV’s determination of the value of the shareholding, and not the value of the company property or assets, although this may be a relevant factor in evidence.

16.72 DOA reports

If, in exceptional circumstances, an “Unagreed DOA” report is required, a request will only be made by SAV through CEO Professional Support (HMRC Team). CEO Professional Support (HMRC Team) will then issue ad hoc advice concerning action required.

16.73-99 Reserved

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