Q&As

If (post-transaction) HMRC agrees a valuation for shares, and those shares are then sold on at a higher value, can HMRC go back on the agreed valuation for the initial sale and claim more tax is payable?

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Published on LexisPSL on 12/12/2018

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • If (post-transaction) HMRC agrees a valuation for shares, and those shares are then sold on at a higher value, can HMRC go back on the agreed valuation for the initial sale and claim more tax is payable?

If (post-transaction) HMRC agrees a valuation for shares, and those shares are then sold on at a higher value, can HMRC go back on the agreed valuation for the initial sale and claim more tax is payable?

If shares are later sold for more than a post-transaction valuation agreed with HMRC, then whether HMRC can revisit that valuation will depend on the facts. There may be good reasons why the value of shares has increased since their valuation was agreed with HMRC, eg there may have been a takeover bid for the issuing company in the meantime. HMRC may still be tempted to revisit the valuation, especially if the sale occurred not long after the valuation was agreed. In general, the use of hindsight (ie taking account of information that was not available at the time or events that occur after the relevant time) is prohibited when agreeing tax valuations. However, case law has established that evidence of actual

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