Q&As

Is HMRC accepting a ‘coronavirus (COVID-19) discount’ for enterprise management incentive valuations in order to take into account the reduction in value of companies due to the current pandemic?

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Published on LexisPSL on 21/04/2020

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

  • Is HMRC accepting a ‘coronavirus (COVID-19) discount’ for enterprise management incentive valuations in order to take into account the reduction in value of companies due to the current pandemic?

This Q&A assumes that the shares to be valued are in a private company.

The basic rule is that the market value of unquoted shares or securities is the price which those assets might reasonably be expected to fetch on a sale in the open market between a hypothetical willing seller and a hypothetical willing buyer. The transaction is assumed to take place in the open market based on information which is available in the public domain, including published information and matters of genuine public knowledge. (see: HMRC Capital Gains Manual: CG59540)

In these circumstances, for companies applying for valuations now, the hypothetical purchaser of shares should be aware of the current economic climate caused by the coronavirus (COVID-19) global pandemic and therefore this should already have been factored into the value of the shares being suggested

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