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6.1 Property Valuation Process

The administration and collection of taxes is the responsibility of HMRC. In matters involving the valuation of land and buildings they will seek specialist advice from the Valuation Office Agency (VOA), an executive agency of HMRC.

The decision to refer any particular property valuation case to the VOA lies with HMRC. They may seek advice for various purposes and at different stages of a compliance enquiry.

• To inform risking decisions as to whether a compliance enquiry is required.
• To provide not negotiated advice to inform compliance enquiries, and the acceptability or otherwise of valuations included in an account.
• To request agreed valuations, involving discussion with a taxpayer, if valuations included in an account are not acceptable.

If not negotiated advice is requested, this will normally be without contact with a taxpayer, and is to assess whether valuations returned are fair and reasonable. The VOA will consider the valuation in relation to any information provided by HMRC and the data the VOA already holds, for instance survey details and sale prices of the property itself, or those of a similar character and location sold around the same time as the date of death. The VOA will also rely on data it holds for its other statutory purposes, such as that used in its assessment of properties for Council Tax. In most cases the valuation returned is accepted and the taxpayer is unaware that the process has taken place.

In some cases, following not negotiated advice, HMRC will instruct the VOA to discuss the valuations with a taxpayer. In the first instance it may be necessary to clarify some factual information about the nature of the property or the legal interest. At this stage an inspection of the property may be required. This does not mean anything is wrong, simply that more information is needed to reach a conclusion. The taxpayer or an agent acting on their behalf may be asked to provide additional information at this stage to support the valuation returned.

If, having obtained the necessary information, the VOA caseworker is of the opinion that a different valuation is appropriate to that returned, they will seek to agree the value with taxpayer or their agent.

In most cases the valuation will be agreed, but if this is not possible the VOA will report to HMRC who will decide on the next steps.

If a valuation cannot be agreed, it may be referred on appeal to the Upper Tribunal (Lands Chamber). If non-valuation issues (such as the extent of the permitted area for private residence relief claims) cannot be agreed the matter may be referred to the First Tier Tribunal (Tax Chamber) for determination. In either instance the VOA caseworker will be instructed to act as an expert witness at any Tribunal hearing.

6.2 Contact with the parties

Caseworkers must ensure the contact is with the taxpayer or the taxpayers agent, as advised by HMRC

Where the caseworker considers it necessary to make any enquiries of the tenant or the purchaser of a property which has been sold they should first confirm through the taxpayer or agent that there is no objection to such an approach being made.

In negotiation cases caseworkers should make such inspections as are considered necessary before entering into negotiations with the taxpayer or agent. What is necessary will depend on the facts of the case but for recent valuation dates caseworkers should normally endeavour to internally inspect all properties where the returned figure cannot be accepted.

6.3 Inspections - Statutory provisions

Paragraph 12A of Schedule 36 of the Finance Act 2008 provides that an officer of Revenue and Customs may enter and inspect premises (and any other property on the premises) for the purpose of valuing, measuring or determining the character of the premises or property if the valuation, measurement or determination is reasonably required for the purpose of checking any persons position as regards specified taxes which include those in which the VOA is involved - Inheritance Tax, Capital Gains Tax, Corporation Tax in respects of chargeable gains, Stamp Duty Land Tax, and Annual Tax on Enveloped Dwellings. A person who the officer considers is needed to assist with the valuation, measurement or determination may enter and inspect the premises or property with the officer.

This statutory inspection power is subject to conditions contained in paragraph 12B. An inspection using the statutory power contained in paragraph 12A may be carried out only if either Condition A or Condition B is satisfied.

Condition A provides that the inspection is carried out at a time agreed to by the relevant person, and that the relevant person has been given notice in writing of the agreed time of the inspection.

Condition B provides that the inspection has been approved by the tribunal, and any relevant person specified by the tribunal has been given at least 7 days notice in writing of the time of the inspection.

The Act defines relevant person as

1. the occupier of the premises, or
2. if the occupier cannot be identified or the premises are vacant, a person who controls the premises.

In most cases it will usually be possible to arrange an internal or onsite inspection for valuation purposes with the parties (or the current owner or occupier of a property) by agreement. It should however be noted that even when making the inspection by agreement, and confirming this in writing, the inspection involves the use of the statutory powers.

The Home Office Code of Practice - Powers of Entry (December 2014) publication issued by the Secretary of State under Section 48 of the Protection of Freedoms Act 2012 requires the person exercising a power of entry, such as those under Paragraph 12A of Schedule 36 of the FA 2008, should make or have made a record of any exercise of powers of entry or associated powers.

6.4 Inspections - Conduct of inspection

If an officer is confronted with a situation where only a minor (child) is present on the premises, under no circumstances should any inspection of the property be made either internally or externally. This also extends to the taking of, or checking of, dimensions. On returning to the office, the officer should send a letter to the occupier explaining the circumstances and an appointment should be made with a request that an adult be present on the next occasion.

6.5Inspections - Authority to be produced

In all cases the caseworker should produce their photo identity card.