IHTM36153 - Raising enquiries into incorrect accounts, information and documents: undervaluations (general)

If you are enquiring into an undervaluation you should consult the valuer ( IHTM36143) before you raise any enquiries.

When raising enquiries into under-valuations you should bear in mind that you are primarily seeking to establish whether or not the taxpayer may have been negligent and not any valuer employed by them. (Only in those rare cases where there is evidence to suggest that IHTA84/S247 (3) ( IHTM36104) or IHTA84/S247 (4) ( IHTM36105) penalties may apply will you need to consider the motives and actions of the agent.)

If the original valuation was supported by a professional valuation you need to ask yourself whether it was reasonable for the taxpayer to rely on this valuation or was there something else known to them that would cast doubt on the value. You will need to find out

• what steps were taken to arrive at the figures included in the account
• if based on a professional valuation, what instructions were given to the valuation advisor and what were the terms of the advice received (for example, was the valuer instructed to provide an open market value ( IHTM09703))
• was the valuer provided with all relevant information about the property
• was advice was sought from more than one valuer (if so, the terms of that further advice should be obtained)
• if the property is being sold or has been sold, when was the decision to sell taken
• what was the offer price and how was this price arrived at (if professional advice was sought or given on marketing and selling the property, you should ask to see the terms of any instructions or advice given)?

Depending upon the circumstances you might wish to ask for copies of records, minutes of any discussions, meetings or any other correspondence between the taxpayers, agents and valuation advisors where valuation issues or sales and marketing issues were discussed.

There are a number of specific issues that you may need to consider in connection with undervaluations of land or buildings ( IHTM36154).