The valuation of shares in private companies can be a particularly difficult exercise as so many of the issues are subjective.
HMRC frequently challenges such valuations, and this may leave the professional adviser taxpayer exposed not just to additional tax, but also penalties and interest if the original valuation does not stand up.
We can help you with the initial valuation, a second opinion on an initial valuation, or assisting the defence of a valuation when challenged by HMRC.
We were instructed by Fee Protection Insurance company to defend an accountant’s valuation of the majority and minority shareholdings of husband and wife following a disposal on the restructuring of their group. HMRC had rejected the accountant’s valuation and were proposing alternative figures that would have resulted in extra tax of around £400k.
We visited the accountant and looked at the detail behind the company’s accounts. We identified additional factors which had not been taken into account by HMRC. As a result of our work, HMRC ultimately accepted the original calculations. The client didn’t even have to pay any professional fees as it was covered by insurance – and the cover came free with the company’s fee protection policy!