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.
Unfortunately you have to rework the treatment of the losses as a result of making an averaging claim, otherwise it is quite possible that you would be claiming a loss against no income. If the averaging adjustment makes no difference to the benefit of loss relief, it does make your calculations that much easier, but you do need to check.
Do the averaging adjustments
calculate the best utilisation of the losses
Adjust the tax figure on the current year return and submit your workings with the return to show how you have calculated the tax adjustment.
It sounds as though you may have a conditional gift in the will whereby the shares are left to the family on the condition that they pay £x to Y within 3 years.
I agree with DJKL that this is a personal responsibility of the family shareholders and is not a liability of the company.
The executors should to be cautious to ensure that the condition is satisfied to ensure that the family are indeed entitled to the shares (possible subject of forfeiture if the condition is not satisfied).
My understanding of FA 1986 Section 102B was that it applied to gifts of an undivided share of an interest in land. The OP has not mentioned a gift of an undivided share.
Furthermore, Section 102B only applies to gifts made after March 1999.
The base cost of the property for CGT purposes is, in the situation of a gift from a connected party, the value at the date they acquired the property (subject, of course, to any hold over elections at the time).
If the individuals were not aware of the gift, then it is unlikely that there was a [joint] hold over election.
Unfortunately, if you do have a GWROB then the full [current market] value of the property will fall within the deceased mother's estate for IHT purposes. The base cost for your clients, however, remains as the value at the date of the original gift.
There is no relief for double taxation.
Finance Bill 2014
Three new sections inserted in ITOIA 2005 as s.850C, D and E.
If you google 'Mixed Partnerships' you will find HMRC's technical guidance
These rules were bought in December 13 / April 14 to reallocate excessive profits that have been allocated to a non-individual partner.
Excessive should be measured against an appropriate notional profit with reference to the commercial rate of interest on the company's capital contribution to the firm.
If the company's shares is deemed to be excessive, the reallocated profit will be liable to tax and NI in the hands of the individual
If the will makes no mention of the bequest bearing its own IHT liability, it falls upon the Residue of the estate. If there is insufficient Residue to settle the debts then the legacies are abated in order of Residue, General Legacies and then Specific Legacies.
In short; yes the wife may effectively have to pay all of the IHT.
IHT on Shares
As you suggest, the will can be rewritten so that the Nieces and Nephews bear the cost of the IHT on the transfer of the shares. Unquoted shares would qualify for the Instalment option, so the IHT can be paid over a number of years (10) with interest.
If it is expected that the wife will survive the husband, your clients may want to reconsider the sequence so she inherits the shares and then subsequently gifts them to the Nieces ad Nephews. Subject to PET provisions etc.
HMRC not playng ball
Thank you for your comments.
Having previously thrown s38 (1)(b) at the Inspector it has been batted back.
The legislation states ".... any expenditure incurred on the asset by him or on his behalf for the purpose of enhancing the value of the asset....."
The Inspector is arguing that the expenditure is incurred on a different asset (the IP) not the shares. Similarly, the Inspector is suggesting C Limited had no claim over the shares in X Limited, so the expenditure does not qualify as "establishing, preserving or defending his title".
I am proposing to continue this argument (particularly the enhancement issue) but wondered if there were any cases to help me.
I will review the above case, thank you Portia.