Inheritance tax manual - Section 27 - Part 4 : Final Reports

Previous PageSection ContentsNext Page

Part 4 : Final Reports

27.55 Form VO 1110

Once agreement has been reached in respect of a Valuation case, a final report should be issued on Form VO 1110 (Appendix 14).

N.B Depending on the requirements of the case, VO 1110 requires the DV to select from a number of different options. In order to safeguard against possible confusion in HMRC(IHT), it is important that all unused options are deleted from the final report.

When issuing a final report, the DV should, in the vast majority of cases, follow the procedures outlined in 27.56 - 70 below. However, there will be a few cases which do not fit easily into these procedures and these are considered in more detail at 27.72 - 27.75 below.

Form VO 1110 is a Microsoft "Word" template and, after the deceased's details have been entered, the DV is required to complete a number of standard paragraphs.

The paragraphs to be used will vary depending on the circumstances of the case but either Part 1a or Part 1b of the form must be completed in all cases. In determining whether Part 1a or Part 1b should be completed the DV should proceed as follows:

Part 1a should be completed in all cases where:

  • valuations are agreed; or
  • returned figures are accepted by the DV.

Part 1b should be completed in all cases where values have not been finally agreed but the DV considers that the case should be closed for one of the reasons set out in sub-paragraphs x - xii of VO 1110.

Part 1a) of Form VO 1110

27.56 General

The circumstances where Part 1a should be completed are described at 27.55 above. Part 1a comprises the following:

  • Opinion of Value - this must be completed in all cases (see 27.57 below).
  • Supplementary endorsements - these are to be completed where appropriate (see 27.58 below).
  • Endorsement regarding negotiations - this is to be completed where appropriate (see 27.59 below).
27.57 Opinion of Value

This must be completed in all cases and endorsed with either sub-paragraph i) or sub-paragraph ii) as appropriate.

Where sub-paragraph i) is completed, the 'Returned' value should be taken as being either the value returned by the parties or the value inserted on D12 or its equivalent by HMRC(IHT). In the latter case, the HMRC(IHT) caseworker will have added or amended the figure in red ink and initialled the alteration on behalf of the Director.

Sub-paragraph ii) should be completed where either no valuation has been returned by the parties or a valuation has been returned in respect of a different valuation unit (e.g. where the DV is reporting a valuation of an undivided share and the parties have returned a valuation of the entirety). In such cases the DV should also clearly identify the valuation unit that he or she has adopted (e.g. half share)

27.58 Supplementary endorsements

In certain circumstances, the DV will also be required to complete 1 or more of the Supplementary Endorsements (sub-paragraphs iii) - vi)), namely:

iii) "and the value of qualifying trees and underwood growing on the land has been excluded" (see Section 10 para 10.30)

iv) "and that the value attributable to the relevant business property is £*" (see Section 11 para 11.49)

v) "and that the value apportioned to that part of the property which is used exclusively for business purposes is £*" (see Section 11 para 11.49)

vi) "and that the value transferred excluding the value of the *insurance policy/*right of action is £*" (see Section 7 para 7.35).

If, in multi-property cases, the endorsement does not apply to all the items in the DV unit area, the item numbers (using the numbering adopted on Form D12 or its equivalent) to which it applies must be stated.

27.59 Endorsement regarding negotiations

In all cases where values have been agreed, the DV must complete sub-paragraph vii) stating the name and address of the person or firm with whom they have been agreed. DVs are reminded that all agreements must be in writing (see 27.37 above).

Part 1b) of Form VO 1110

27.60 Completion of Part 1b

The circumstances where Part 1b should be completed are described at 27.55 above. When completing this part, the DV must also give a reason as to why the case has been closed by completing one or more of sub-paragraphs x - xii, namely:

x) "because the value transferred does not exceed the tax threshold". (This should be used in death cases only - see 27.35 above)

xi) "because 100% Agricultural Relief is available in respect of the whole property and there is no difference between the agricultural value and the market value" (see Section 9 para 9.78)

xii) "because 100% Business Relief is available in respect of the whole property".

Part 2) of Form VO 1110

27.61 When to complete Part 2

Part 2 must be completed in all cases where tax is payable, an opinion of value has been arrived at in accordance with 27.35 above and one of the following circumstances is satisfied:

  • where Form D12 (or equivalent) contains more than one item situated in a single DV unit area
  • where Form D12 (or equivalent) contains only one item situated in a single DV unit area which has been split for valuation purposes (see Section 25 para 25.6)
  • in all Lifetime transfer cases where the "value transferred" differs from the "value of the property" transferred (see 27.63 below)
  • in all cases involving agricultural property (see 27.66 below).
27.62 Completion of Part 2

When completing Part 2, the DV must provide the following information:

  • The Item Number of each property valued as it appears on Form D12 or its equivalent.
  • The address of the property or sufficient detail for it to be identified.
  • Where agricultural property is involved, the DV's opinion of the agricultural value of each item (see 27.66 below). In multi-property cases, all reported values must be totalled at the bottom of the column.
  • The DV's opinion of the open market value of each item (see 27.63 - 27.66 below for special circumstances). In multi-property cases, all reported values must be totalled at the bottom of the column.
27.63 Lifetime transfers

In lifetime transfer cases, where the "value transferred" of an item differs from the "value of the property" transferred (see Section 4 para 4.16) and where HMRC(IHT) has not requested "before" and "after" valuations in accordance with Section 4 para 4.19, VO 1110 should be completed as follows:

  • The value transferred should be inserted in the cumulative total in the "Opinion" at Part 1a) (where appropriate).
  • The value of the property transferred should be inserted in Part 2 and the item should be endorsed "The value of the property transferred".

Where HMRC(IHT) has requested "before" and "after" values, the Final Report should be modified in accordance with 27.75 below.

27.64 Grouping and splitting

Where items returned by the parties have been either grouped or split for valuation purposes, the report should be marked in accordance with Section 25 para 25.6.

27.65 Multi-property cases where some items attract 100% Business Relief

In cases where the DV is required to complete Part 2) of VO 1110 and some items have not been valued because they attract 100% Business Relief, those items should be endorsed "100% Business Relief claimed".

For cases involving agricultural property where 100% Business Relief is claimed, see 27.66 below.

27.66 Agricultural property

For cases involving agricultural property (see Section 9), the DV should proceed as follows:

  • 100% Agricultural relief cases where open market values and agricultural values are equal

    Where the whole estate attracts 100% Agricultural Relief there is no need to report an opinion of value and Part 1b)xi of VO 1110 should be completed.

    Part 2 of VO 1110 should be endorsed "100% Agricultural Relief claimed".
  • Multi-property cases where only some items attract 100% Agricultural Relief and whose open market values and agricultural values are equal

    Where Part 1a) is required to be completed (see 27.55) and only part of the estate comprises items, or parts of items, where the values are equal and 100% Agricultural Relief is appropriate, the value of these items, or parts of items are to be excluded from the reported values.

    When completing Part 2, the relevant items, or parts of items, should be endorsed "100% Agricultural Relief claimed".
  • 100% Business Relief cases comprising agricultural property where open market values exceed agricultural values

    Where the whole estate attracts 100% Business Relief there is no need to report an opinion of value and Part 1b)xii of VO 1110 should be completed.

    Part 2 of VO 1110 should be endorsed "100% Business Relief claimed".
  • Multi-property cases where some items of agricultural property attract 100% Business Relief and their open market values exceed agricultural values

    Where Part 1a) is required to be completed (see 27.55) and only part of the estate comprises items where the values are equal and 100% Business Relief is appropriate, the value of these items are to be excluded from the reported values.

    When completing Part 2, the relevant items, or parts of items, should be endorsed "100% Business Relief claimed".
  • As for 4 above but in addition some other items of agricultural property attract 100% Agricultural Relief and their open market values and agricultural values are equal

    Where Part 1a) is required to be completed (see 27.55) and certain parts of the estate comprises items where 100% Business Relief is appropriate, and certain other parts comprise agricultural property where the values are equal and Agricultural Relief is appropriate, the values of all these items are to be excluded from the reported values.

    When completing Part 2, the relevant items, or parts of items, should be endorsed "100% Business Relief claimed" or "100% Agricultural Relief claimed", as appropriate.
  • Other cases

    Where Part 1a) is required to be completed, the market value of the whole estate is to be reported.

    Part 2 should be completed showing both the open market values and the agricultural values.
27.67 Endorsement regarding negotiations

In multi-property cases where Part 1b) has been completed and values have only been agreed in respect of some of the items, the DV must complete sub-paragraph xiii), specifying which items have been agreed and stating the name and address of the person or firm with whom they have been agreed. DVs are reminded that all agreements must be in writing (see 27.37).

NB. There is no need to complete this sub-paragraph in cases where Part 1a) and sub-paragraph vii) have been completed.

Part 3) VO 1110 - Sales

27.68 General

The importance of notifying HMRC(IHT) of any sales is referred to at 27.9 above. Therefore, when issuing the Final Report the DV must complete Part 3 in respect of any items (or parts of items) that are known to have sold.

27.69 Sale at a price lower than the reported value

If the sale price of any item is lower than the reported value, the DV should proceed in accordance with Section 12 para 12.74.

If the DV is unaware of any changes affecting the item, sub-paragraph xiv) should be completed.

If the DV is aware of any changes a note should be appended in respect of that item.

Part 4) VO 1110 - Contact with parties

27.70 General

To avoid any confusion, the DV must notify HMRC(IHT) as to whether the parties have been advised that the papers have been returned by completing Part 4).

27.71 Aggregation

In multi-property cases, it is preferable that, whenever possible, the value of individual items should be accepted or agreed, since a value determined for IHT purposes may subsequently be used as evidence to establish the value of those items for other purposes (e.g. the value on death may establish the acquisition cost for CGT purposes – see CGT Manual para 6.137 et seq). However, there will be occasions where the DV is able to accept or agree an aggregate value of several properties without prejudice to the value of any individual property comprised therein and discretion is given to report accordingly.

Aggregate values should not be accepted or agreed in cases involving agricultural, business, falls-in-value or similar reliefs nor where woodland is involved.

Whilst HMRC(IHT) are prepared to accept an Opinion of Value agreed in aggregate without prejudice to the value of individual items they are not prepared, in conveying the Commissioner’s determination, to inform the parties to that effect. Accordingly the parties must be informed in writing of this condition under which the aggregate value is agreed when reporting a case “as returned”, or in confirmation of a negotiated valuation agreed in aggregate.

In such circumstances, when completing Part 2), the DV should show only the total value for those items which are being reported in aggregate.

When completing Part 4), the DV must complete sub-paragraph xv) and, if the values of only some items have been so agreed, identify those items whose values have been agreed in aggregate.

Other cases

27.72 Cases involving Related Property

The procedure for dealing with cases involving related property can be found in Section 15. In such cases HMRC(IHT) will require a valuation of both the transferor's property and its aggregate value with any related property. In such circumstances, the DV should substitute one of the following alternatives for the Opinion if required to complete Part 1a) of VO 1110:

Where the valuation rule applies (see Section 15 para 15.19)

"I am of the opinion that the aggregate value of the transferor's property and the

related property at the date of transfer is £*

*As returned/Returned at £*

Increase/Decrease £*

and that the value of the transferor's property if not part of the aggregate, at that

date is £*

*As returned/Returned at £*

Increase/Decrease £*"

Where the valuation rule does not apply (see Section 15 para 15.17)

"I am of the opinion that the aggregate value of the transferor's property and the

related property at the date of transfer is £*

*As returned/Returned at £*

Increase/Decrease £*

and that the related property valuation rule would not result in an increase in the

value attributable to the transferor's property, so it has not been applied".

The remainder of VO 1110 should be completed in accordance with 27.60 et seq. above.

27.73 Lifetime transfer - falls in value cases

The procedure for dealing with lifetime transfer - falls in value cases can be found in Section 13. In such cases, the DV should substitute one of the following alternatives for the Opinion if required to complete Part 1a) of VO 1110:

Value at date of gift (see Section 13 para 13.20 & 13.21)

"I am of the opinion that the market value of the property transferred by the

lifetime transfer at the date of that transfer is £*"

Value at relevant date, conditions unchanged (see Section 13 para 13.22)

"I am of the opinion that the market value of the property transferred by the

lifetime transfer at the relevant date is £*

On the basis that there have been no changes in the relevant conditions"

Value at relevant date, change in conditions (see Section 13 para 13.22)

"I am of the opinion that the market value of the property transferred by the

lifetime transfer at the relevant date before adjustment for the changes in the

relevant condition is £*"

The remainder of VO 1110 should be completed in accordance with 27.60 et seq. above.

27.74 SAV Cases

For the time being, formal references from SAV will continue to be made on Form Val 63A (see Appendix 5) and, when reporting such cases, the DV should follow the procedures set out in Section 16 Part 2.

27.75 Others

There will be other cases where the DV deems the formal wording outlined at 27.56 et seq. to be inappropriate when reporting (e.g. when supplementary valuation advice is required). In such circumstances, the DV should adapt Part 1a) of VO 1110 accordingly.

Reporting procedure

27.76 Cases to be reported by email

All final reports to HMRC(IHT) should be sent by email.

27.77 Reserved

Previous PageSection ContentsNext Page