EIM08003 - Employment income: transfer of real property to employees: action following District Valuer's report

Section 62 ITEPA 2003

If the amount of the informal valuation provided by the District Valuer (see EIM08002) exceeds the consideration paid, the Inspector should write to the employee advising him or her that the amount of the excess represents earnings taxable under Section 62 ITEPA 2003 for the year in which the land was transferred. When this advice has been given the appropriate action should be taken to tax the excess over the amount paid as employment income.

If the valuation is disputed on appeal, the appellant should be asked if he or she is employing a professional adviser to act on his or her behalf and he or she may be informed that arrangements will be made for the District Valuer to enter into formal negotiations with him or her or with that adviser. Any agreed valuation will be reported in due course by the District Valuer.

If agreement is not reached, the District Valuer will report this, together with the reasons for the failure to reach agreement and his or her opinion of the value that he or she considers could be defended on appeal. If it seems that no agreement on valuation is possible, and that the matter will need to be resolved by the commissioners, ask the District Valuer to provide what is known as a “defendable on appeal” valuation. PAYE Technical, together with the files of the employer and of the employee concerned. The submission should either confirm that liability has been accepted (so that the only point in dispute is one of valuation) or detail any other disputed points that are relevant to the appeal – for example, which section of charge applies to any under-valuation which is established.

Jurisdiction for hearing of the appeal lies with the General Commissioners (or, on election, to the Special Commissioners) and not to the Lands Tribunal. Although valuation of the land may be a major issue in the appeal, or perhaps the only issue if an employment income liability is agreed in principle, the subject of the appeal is a charge on employment income in the form of earnings or benefits. Jurisdiction for the determination of employment income liability rests with the Commissioners and there is no option for the taxpayer to ask the Lands Tribunal to consider the matter instead. (This text has been withheld because of exemptions in the Freedom of Information Act 2000)