Share this content
0
614

March 82 values - on what basis?

client has been given a very high value by a surveyor

Didn't find your answer?

Search AccountingWEB

My client bought a plot of land in the 70s for a modest amount  (let's say £50k).  it has been used as a yard for his business during this time.  He is now selling it to a developer for c £3m and they will build an obscene number of houses on it.

We need a March 82 value.  a local surveyor has valued it at £1m in March 82!!!  It is only worth about 3 x that now.  He has valued it "assuming its use as accommodation land".

I think he has way overvalued it (by about a multiple of 10!) however you go about it, but surely we should be valuing it in 1982 as a plot of commercial land  and not as accommodation land.  The client had no idea he was sitting on a big retirement fund until he was approached by developers and certainly c 40 years ago the thought of development had not crossed his mind.

I havenot had a situation like this before.  We obviously want the best result for the client but don't want to draw attention from our friends at HMRC.

Replies

Please login or register to join the discussion.

avatar
21st Sep 2018 12:31

Was the surveyor told the reason why the valuation was required and the basis on which to value it?

Assuming it's a surveyor who is a member of a professional body, you would think (s)he'd be very clear and, for PI purposes, not wanting to be materially incorrect.

No idea whereabouts in the country you are but, for what it's worth, I agree that a £1m valuation in March 1982 of something now worth £3m looks wrong.

I'd start by going back and see what the surveyor was asked to do, and what for, and see exactly what the valuation report says.

Thanks (1)
21st Sep 2018 12:46

He should be valuing it at what it was in March 1982.

Not what it might have been had it had planning permission for houses.

Somewhere slightly above cost is likely to be the right answer.

Thanks (1)
avatar
21st Sep 2018 13:12

Has the surveyor been formally instructed and is this a formal valuation?

Does seem odd given that there can only be one reason why a March 82 valuation is needed, and every surveyor knows that reason.

Thanks (0)
avatar
21st Sep 2018 13:28

The valuer has been asked to give a March 82 valuation and has even put it in writing. I assume he knows why he was asked to do so, but maybe that was dangerous. We will revert and ask him for a value based on what the land was being used for in March 1982 (and make sure he knows why we need the valuation).

Thanks (0)
to snickersinatwix
21st Sep 2018 13:34

You also need to get more than one valuation.

1982 is a long time ago. These valuations are little more than guesswork.

Thanks (0)
avatar
to snickersinatwix
21st Sep 2018 13:54

Make sure that the valuer also knows that the valuation will be relied upon for CGT purposes and they may be required to justify the figures in the event of an HMRC enquiry.

Thanks (0)
avatar
By John R
21st Sep 2018 13:50

If a qualified valuer has given his opinion who are we, as accountants, to challenge this? It is likely that the valuer will have checked out similar land in the area that was sold around that time before giving his opinion. It should be open market value, not current use value. If I had definite concerns about the value, I would express those concerns to the client and suggest that he might like to obtain the opinion of another valuer. However, if the client accepts the valuation, he should be warned that the DV will almost certainly challenge the value and this could give rise to some negotiation between the valuer and the DV and could result in extra tax. To avoid the potential problem of interest and penalties, a post transaction valuation check should be requested.

Thanks (0)
to John R
21st Sep 2018 14:08

John R wrote:

If a qualified valuer has given his opinion who are we, as accountants, to challenge this?

I would always challenge something that looked wrong.

Thanks (1)
avatar
to John R
21st Sep 2018 20:48

John R wrote:

If a qualified valuer has given his opinion who are we, as accountants, to challenge this?

I think it would be grossly negligent not to 'query' or seek further details as to how the valuation was derived. As has been said, it could be out by a factor of 10. I think a polite, professional discussion would not be a "challenge" in any negative sense.

Thanks (0)
Share this content