Main Home / Business Valuation

[tha1_n]

Hi, I was wondering if anyone can help me out.

I've got a client who had a fish and chip shop which is part of his main home...
the upstairs - 4 bedrooms and bathroom
downstairs - kitchen, living room, then there was the shop floor and another kitchen area (business).

Due to a compulsory purchase, he's had to sell up and the home/shop was subsequently demolished and therefore no goodwill on the business. The money received is therefore essentially for the actual building.

My problem is how to split this property for PPR and Entrepreneurs Relief purposes. Based on floor space the shop is 25% of the property, I've thought about bills but it's difficult to split between shop and home porportions...

Also, while I'm here could anyone tell me if there is any type of redundancy payment my client can receive for loss of his business?

Many thanks

[mullet]

For PRR/ER purposes you need to get a professional valuer to apportion both disposal value and original cost. It isn't based just on floor area, and values of business/residential premises have fluctuated at different rates over the years - so the split at disposal will not necessarily be the same split as at acquisition.

Redundancy payment is more about employed status. If the premises were subject to a CPO then it is feasible that an element of that payment was to compensate your client for the loss of his business - so it is possible that part of the payment should not be treated as relating to the premises. Did the local authority (or whoever) put forward valuations in order to agree the payment figure?

[tha1_n]

The problem is that it's now been demolished so it's difficult to get a professional valuer to assess the property...so I need to establish a reasonable method of proportioning the property. Is there any other methods you suggest.

Should this get enquired into surely HMRC will have no case to argue given that the property no longer exists!?

Thanks for your advise re. the redundancy pay...I didn't think he would be able to but thought I'd ask just in case.

[mullet]

Should this get enquired into surely HMRC will have no case to argue given that the property no longer exists!?

Absolutely not true. They would get the District Valuer to give apportionments based on the historical records that were held by the DV. And if HMRC used those figures in an enquiry amendment, your client might not be able to put forward an alternative argument - the boot is definitely on the other foot.

The best that can be done now is for your client to engage a valuer (FRICS, not "just" an estate agent) to establish apportioned valuations based on verbal explanations coupled with whatever historical records might be available. It might cost £300 but that amount could easily be saved in the long run.