There seems to be little doubt that the current government is almost working against businesses in the UK. However, professional services businesses seems to be benefiting from changes in tax, particularly Inheritance Tax reliefs which are being significantly curtailed.
Landowners and business owners all now having to review the structure of their ownership to ensure that they are now operating in a tax efficient manner. In many cases they would have had the benefit of 100% relief from Inheritance Tax on death; this relief has been significantly reduced.
At Oakwood we’ve spent the last few months working with leading solicitors and accountants to assist clients in their property reviews. We have provided RICS “Red Book” valuations to assist in tax planning.
Many people do query the need for a formal valuation, often claiming that they know the value of their property. Whilst it’s true that most people have some idea of the value of their property we frequently find there are many issues which impact value that the owners are not necessarily aware of. In one recent case, for example, we found a number of issues with boundaries on the Land Registry plan and rights of access that have not been properly documented. These impact the value of the property and need to be considered.
A Red Book valuation carries significant value when negotiating with HMRC on the correct value for the assessment of taxation; such valuations should be accompanied by evidence of value (i.e. comparable transactions) together with a detailed methodology as to how the valuation has been arrived at.
Where a client is considering distribution of assets too family members or in to Trusts then the formal valuation provide impartial values which are less likely to be challenged by those involved.
The current requirement for valuation work is also unearthing an historic requirement for valuations relating to previous inheritance and transfers; this is where client inherited or received property in the past but there was no formal record of the value at the date of transfer. Whilst historic valuations are caveated it by the valuer, for obvious reasons, we do have a methodology for establishing historic values. Values may be required for trust purposes (where values are often required every 10 years) or to establish a base value for the assessment of Capital Gains Tax.
The value of a formal valuation should not be underestimated by clients as a good value will cover of issues such as potential development and opportunities that may occur within the Estate ownership.
We are aware that close can have concerns about the cost of professional advice, but equally we are working with a number of clients where little or no advice was taken in the past and cases are now having to be unravelled. The cost of this can often exceed the costs that may have been incurred had good professional advice been taken at the time of the original transactions.
At Oakwood we are happy to chat with clients and their advisers without obligation to discuss how we may assist at this challenging time.
Graham Bowcock MRICS
Chartered Surveyor and Registered Valuer
