CG16400 - Valuation: more than one interested person: introduction

It is left to your discretion to decide how negotiations should be conducted prior to any closure of enquiries when there is more than one person affected by the conclusion. It is important that there is adequate liaison and that the actions taken by each Office are consistent.

If agreement is reached the Office for each interested person should hold full details of the agreement.

This part of the manual is concerned with situations where agreement is not reached.

TMA70/S57 & SI1967/149

TMA70/S57 gives the Board of Inland Revenue power to make regulations concerning the conduct of appeals. In particular, Section 57(1)(d) gives the Board power to make regulations to ensure that any person who is affected by a determination of market value for Capital Gains Tax purposes can be a party to such a determination and can be bound by it.

The Board exercised this power in the Capital Gains Tax regulations 1967 (SI1967/149) which came into effect on 16 February 1967. Some of the original regulations were amended by the new procedural rules for General and Special Commissioners which came into effect from 1 September 1994, and again from 1 April 2009 when First-tier and Upper Tribunals replaced the Commissioners.

The purpose of the regulations is to ensure that where

• the market value of an asset on a particular date, or
• an apportionment of any valuation or amount

affects the Capital Gains Tax liability of more than one person then for all of those persons

• each has the opportunity to have a say in determining that market value or apportionment
• the same market value or apportionment is used in each of their computations and
• that market value or apportionment is determined as soon as possible.

For example, in a transaction between connected persons each has an interest in the figure which is determined as the market value of the asset transferred at the date of the transaction. That market value determines the disposal proceeds to be credited in the computation of the vendor and the cost to be debited in any subsequent disposal by the purchaser. Without the regulations the market value could have to be determined twice, in determining two separate appeals. This would be time consuming and could lead to inconsistent results. With the regulations the market value or apportionment is binding on each party who has been given an opportunity to be joined. This is so whether or not they have taken that opportunity.

It is important that you follow the necessary procedures. If you do not you will not be able to bind a third party to a determination of a market value or of an apportionment. So you may have to pursue a valuation dispute more than once.

For a taxpayer who is an interested party, see CG16430, it may be important to be joined to an appeal about a market value or an apportionment so that his or her interests can be represented. For example, a vendor may want a market value to be determined which is as low as possible while a purchaser may want a market value to be determined which is as high as possible. It is important that both are given the opportunity to be party to the dispute.