HMRC has published a newsletter expressing various views on property valuations in the current uncertain climate. It seems that personal representatives are frequently asking HMRC to reduce or reopen valuations after probate because prices continue to fall. HMRC says that it will only consider a revision if the original valuation was undertaken with incomplete or incorrect information.

They go on to say that personal representatives must instruct valuers to estimate the open market value under normal market conditions with no discounts for a quick sale of the time of year – and that the valuers attention must be drawn to factors which might raise the price such as development potential. Furthermore, in presenting their value, it was suggested that it would be “preferable” to obtain three valuations from different estate agents – or one RICS valuation if a definitive figure is required. (Presumably one valuation from an estate agent who is a member of the RICS would be sufficient).

It seems to me that this goes rather too far. The personal representative is required to take reasonable care to ascertain the value of the property, so he asks a professional estate agent. Why should he have to ask three? In the nature of things, the valuations are likely to be slightly different so what does he do then? Does he take an average (which would not correspond with any of them), or does he take the lowest, the highest or the median. Each can be criticised. What is wrong with just one bona fide valuation?

It also seems to be a bit much to tell the valuer how to do his valuation. Of course it must satisfy section 160 IHTA 1984 which provides that the market value for the purposes of inheritance tax is:

“The price which the property might reasonably be expected to fetch if sold in the open market at that time; but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time”.

We know from IRC v Clay that there should be no discount for a quick sale, but why should the time of year be excluded from consideration? That seems to be specifically envisaged by section 160.

I also wonder why the valuer’s attention has to be drawn to particular features of the property such as development potential. Surely the valuer would know (or ought to know) far better than the personal representative about what particular features are relevant in his valuation. This all seems to be a bit confused to me.