A CGT charge may arise on the disposal of land. In order to calculate the capital gain or loss arising, a valuation to determine the ‘base cost’ is required where:
• the land was owned at 31 March 1982;
• the disposal was a bargain not at ‘arm’s length’;
• the disposal was to a connected person;
• there has already been a part disposal of some of the land and the ‘alternative basis’ of calculation has not been used.
Calculation
• ‘Alternative’ basis – the land disposed is treated as a separate asset – HMRC will accept any ‘reasonable and fair’ method of apportionment.
• Valuation – professional advice is required.
Example:
Where a CGT computation requires a valuation HMRC offer a free valuation check. This service is available only after the disposal has been made but before completion of the Tax Return so you cannot ask for a check in advance of sale. Should HMRC’s valuation differ from the taxpayer’s valuation HMRC give alternatives and reasons.
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