As of 31 March 2016, HM Revenue & Customs (HMRC) has withdrawn two of their informal valuation check services.
The specific valuation checks being withdrawn are:
PAYE Health Checks; and
ITEPA Post Transaction Valuation checks (PTVC)
Who may it affect?
Of particular significance could be the potential consequences for companies who award shares under a non-tax advantage share scheme, following the removal of the PTVC. Originally a company could agree the potential liabilities facing the company and the individuals on a co-ordinated basis, by informally agreeing a valuation with HMRC. Now, without the informal agreement, there is the potential for HMRC to argue against the valuation, opening the door to retrospective and unexpected tax liabilities, coupled with penalties and interest.
HMRC, in lieu of the changes, will now regularly update the guidance manuals, hold workshops for agents and liaise with other HMRC departments to consider specific cases, where a review of a valuation is appropriate.
Future changes
On the back of this change, HMRC will also review the valuation check service for Enterprise Management Incentives, Company Share Option Plans, Save As You Earn share option schemes, Share Incentive Plans and Employee Shareholder valuations, to consider how these services may be improved or amended.
The removal of this service will put greater onus and risk on client’s transactions.
In light of any future changes Beavis Morgan will continue to provide further updates. If, however, you would like further information or assistance with an independent tax share valuation, please do not hesitate to contact Alan Ford or your usual Beavis Morgan Partner. We have carried out many successful valuations and will be more than happy to assist on any future planning.