District Valuer's Intervention

[Fotoman]

I had my father's house professionally valued by the Estate Agents who are in the process of selling it.

The District Valuer has been asked by the Inland Revenue Capital Taxes department to look into this and, without even looking at the house, has suggested the value should be a further £15,000 more. Meaning, of course, an extra £6,000 slush money for the taxman!

Have you had an experience of dealing with District Valuers?

I am informed that I can appeal but, as see it, it's just the District Valuer's word against that of the Estate Agent.

Are these cretins open to offers?
Are they willing to negotiate?
Is their word final, unless I stump hundreds of pounds for further valuations?

Your help, as always, will be most gratefully received.

[wamstax]

In short DV will have valued house on basis of his knowledge of the area and possibly will not have seen house.

Yes you can appeal and negotiate but unless you prepare yourself well e.g. comparing houses sold in the area about the same time with the condition of your late father's house you should not do it lightly. If your estate agent has valued it at a lesser figure then clearly the first step is to put the valuation before the DV along with any other documentary evidence that will show that his value is overstated. Clearly if the difference is only £15K this could be easily defeated if the house value range was above £250K. Likewise if the house value was under £100K the difference might be a bit more difficult to beat. Try the site http://www.nethouseprices.com or similar to get comparisons. However as in all things it will depend on how tenacious you (or your adviser) are as to whether the DV climbs down or negotiates
regards and hope it helps
bill@wamstaxltd.com
http://www.wamstaxltd.com

[chandlersford]

We have had a similar experience with DV. We were asked to prepare a market value for the dissolution of our housing cooperative. We valued the house using a regional estate agent who (thinking they may end up acting as our agent)paid no reference to the condition of the properties and valued them highly. We felt for the purposes of dissolution and therefore capital gaines that the real value of the assests should be reflected in the costs of rectifying them. We paid a great deal of money to a surveyor who found 30k of both structural and more cosmetic repairs bringing the house up to date with like for like replacement of things such as windows and antiquated heating. This was ignored by the DV and we were left with no course of action but to be subject to a huge capital gaines bill on the balance after dispensation - in some cases £30k per houshold in CGT. Are ditrict valuers likely to bite the hand that feeds? No!

[Brian Clarke]

If the house is sold (at arm's length, to an unconnected person), then it is difficult for anyone to argue that the house was worth more than the sale price. You should certainly appeal anyway, just to protect your position, because the appeal period might otherwise expire before you sort everything out.

If the sale is at arm's length, then the Revenue have very little legal authority to substitute an alternative value. Have house prices in the area of your father's house fallen since he passed away? Unlikely, I know, but one has to ask.

[King_Maker]

If the house sells for less than the DV's figure, the excess IHT should be refunded - assuming the property sells in the near future and property prices are not fluctuating wildly.

Also, as you can pay the IHT over 10 years (or earlier sale), there should not be too much of a cash flow hit.

[Fotoman]

Thanks guys for your comments. Houses in the same road do not change that regularly so it is difficult to use this as an argument.

Other beneficiaries (3) to the estate decided to ask £350,000 against a valuation of £320,000; we have now accepted an offer of £340,000. Obviously the additional £20,000 would normally have been liable for CGT but as we are allowed £9,600 each we would have escaped this.

This is just the Taxman's way back alley approach of squeeezing you dry!

Any other thoughts are most welcome.

[King_Maker]

Unfortunately, HMRC are well aware of this manoeuvre to effectively avoid IHT - hence the DV's intervention.

Do you have any grounds to argue that the property has increased by £20,000 since the date of death.

[Peter D]

The CG allowance is £9,200 each and the gain is minus legal and sales fees so re-address the numbers here. However the real numbers only show when you actually sell the property. Remember that if IHT is due then you have the other 60%, if you beat the price down to avoid IHT at 40% you do not get the 60% remainder. Regards Peter

[Fotoman]

Thanks for that correction. My understanding is that the asking price for a property and, indeed, the eventual selling price, bear no relation to the market value. To me it's all about demand; many things sell for more that what they are worth, occasionally selling for less than they are worth.

Also, the value of the house, in respect of paying IHT, should be that at the date my father died (?).

The DV has indicated that if I wish to appeal, I have to provide supporting evidence. I am sure that if I engaged a number of valuers, I'm sure they would all come up with different values, but that would probably prove expensive. Even if I did have a number of valuations, why should the DV be the one who thinks he's right, when he hasn't even been inside the house!

No wonder tax people are one of the most hated in the country!

[peter@2711.co.uk]

I believe you are on a "hiding to nothing". I know of a case where there were 6 Valuations by Estate Agents as at date of death, all very close,yet DV ignored and valued at £85K above asking price; £140K above best offer and claimed they did not have to take into account the sale price. DVs seem to ignore law and regulations under pressure to increase taxes; you would have to commit a lot of time and money to challenge. Normally moving the PPV does not materially affect the Executors net tax liability because IHT & CGT move in different directions