Professional valuations

Produced by Tolley

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Professional valuations
  • Undertaking a valuation exercise
  • Risk areas
  • Valuation work process
  • Money laundering
  • Know your clients’ procedures
  • Measure of valuation
  • What is being valued
  • Information
  • Share valuation report

Professional valuations

The accurate valuation of the company's assets and shareholdings may be required for commercial reasons, ie as a measure to evaluate the price offered for the business, or for tax purposes, ie to ascertain a valuation required for a taxpayer’s tax filing position.

Undertaking a valuation exercise

Valuation work is specialist work, and requires knowledge of methods which are not tax based. As such it is high risk work which is generally tackled later in a tax professional’s career. Most larger firms have ‘badged’ valuation specialists, who are the only people permitted to undertake valuation work. Even in smaller firms, proper consideration should be given as to whether valuation work is permitted under the scope of the practice’s Professional Indemnity Insurance, or whether under general good practice the person has the relevant knowledge and experience to undertake a valuation exercise.

That said, it should usually be beneficial to have a valuation agreed with HMRC. It gives clarity and certainty, and once HMRC agrees a valuation in a post transaction valuation check, this is binding on both parties.

When undertaking a valuation exercise, well-drafted engagement terms are essential. In particular it needs to be clear that withou

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