Tax Valuations

Tax valuations are important because they can drive the tax charge. Tax valuations are different to other valuations and must be performed within certain parameters which are derived from a body of case law going back 120 years. Deloitte’s Tax Valuations team offers a deep specialism in the valuation of unquoted business assets, including shares and intangibles, and the negotiation of values for these assets with HMRC.

Deloitte’s Tax Valuations team

Deloitte’s Tax Valuations team focuses on:

  • Understanding the correct parameters for the valuation, and using them to present and defend an appropriate range of values.
  • Knowing with justification what HMRC can be expected to say about value – not what we think they ought to say, but what we know that they say, based on thousands of previous cases.
  • The ability to act as a powerful representative for taxpayers in negotiations with HMRC, because we understand the relevant case law, and what HMRC has said in similar situations.

Deloitte’s Tax Valuations team comprises both former officers of Shares and Assets Valuation at HMRC and individuals with backgrounds in private practice, including corporate tax and share scheme specialists.

What is Tax Valuation advice?

Deloitte’s Tax Valuation team can provide the following services:

  • Helping taxpayers understand the value that tax authorities are likely to place on business assets so that they can plan accordingly. This includes intangibles, private companies, private company shares, partnership interests and more. Values for tax purposes can differ widely from valuations performed for other purposes, and so it is important that taxpayers take specific tax valuation advice at an early stage.
  • Negotiating values for business assets with the relevant tax authorities on behalf of taxpayers.

There are five different definitions of value for UK tax purposes, depending on the relevant charging provision. Each definition can deliver a substantially different value for the same asset, meaning that there is a different tax outcome if the wrong definition is used.

Each definition is supported by a different mix of statutory framework, case law, precedent and practice. It is important that valuations for tax purposes are performed by specialists who thoroughly understand these distinctions. A valuation which delivers ‘fair market value’ will, at best, be a rough approximation of the correct definition of value for tax purposes.

Other definitions of value may be in point in non-UK jurisdictions.

Corporate and Intangible Valuations

Deloitte’s Tax Valuations team has a wide range of experience in providing tax valuation advice to companies, including advice in respect of:

  • Assisting companies in identifying and categorising intangible assets into pre and post FA 2002 assets on corporate restructurings and trade and asset sales.
  • Advising on the market value and/or arm’s length provision of intangible assets which fall to be adjusted for tax purposes.
  • Advising on which of the two definitions of value are in point for each intangible asset transfer.
  • Advising on the market value of intangible fixed assets which give rise to de-grouping charges on the disposal of a subsidiary.
  • Providing advice on the arm’s length provision of intangible assets transferred, in support of tax deductible amortisation.
  • Negotiating and agreeing the market value and/or arm’s length provision of intangible assets with HMRC.
  • Advising on the market value of companies or shares where Substantial Shareholding Exemption is not available.
  • Advising on the fair market value of assets where an overseas jurisdiction requires that the transfer of an asset is taxed.

Private Company Services

Deloitte’s Tax Valuations team has a wide range of experience in providing tax valuation advice to individuals, partnerships and family-owned companies including advice in respect of:

  • Advising on the market value of respective shareholdings in connected party reorganisations.
  • Negligible value claims.
  • March 1982 valuations.
  • Advising on the market value of taxable business assets for estates passing on death, chargeable lifetime transfers and potentially exempt transfers.

Global Employer Services

Deloitte’s Tax Valuations team has a wide range of experience in providing tax valuation advice to employers and management including advice in respect of:

  • The value of employment related securities such as shares, carried interest and partnership units acquired by management. We frequently value highly geared interests and shares awarded under Employee Shareholder agreements, and agree values with HMRC.
  • The value of shares over which option awards are made under Enterprise Management Incentives schemes or under one of HMRC’s approved share plans, including agreeing values with HMRC.

Publications and Tax Valuations

The Deloitte Tax Valuations team regularly connects with a network of professional tax and legal practitioners who frequently encounter situations where tax analysis is driven by valuation issues. We run occasional seminars, release regular publications and keep our members up to date with the latest news in tax valuations.

Subscribe to the Deloitte Tax Valuations network or recommend a contact here.

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