Occasionally the circumstances of a taxpayer’s acquisition
and/or disposal of shares may lead the Inspector to question
whether the transaction was one negotiated at arm’s length
even though the parties to the transaction were not connected
persons within Section 18 TCGA 1992. In such cases the Inspector
may ask SAV for an informal opinion of value.
In such cases you must first consider whether the price paid
represented a bargain made at arm’s length. When reaching
your decision you must take into account all the circumstances
surrounding the actual sale or acquisition. At this stage you are
not considering a hypothetical sale between hypothetical parties.
If you conclude on the information available to you that the price
paid was not one that you would have expected the parties to
negotiate in a transaction at arm’s length, you should then
provide the Inspector with your estimate of the statutory open
market value of the shares in question.
It is for the Inspector to pursue the matter with the
taxpayer in accordance with the instructions in the CG Manual at
CG14542+. You should not enter into negotiations with the taxpayer
or his/her agent unless they have agreed with the Inspector that
the market value rule (Section 17(1) (a) TCGA) applies.
| Additional Guidance: SVM150000 |
