SVM114030 - Information Standards:
Valuations to which the Finance Act 1973 Legislation applies
Capital Transfer Tax/Inheritance Tax
All valuations of unquoted shares and securities under s.160
IHTA 1984, whether on death, on lifetime transfer or charges in
connection with non interest in possession settlements (also for
any valuation under s.7(5) FA 1894 for Estate Duty purposes on all
deaths on or after 6 July 1973).
Capital Gains Tax
All valuations under s.272(1) TCGA 1992 (or the corresponding
earlier statutory provisions) arising out of a disposal on or after
6 July 1973. This includes cases where an acquisition value needs
to be determined at a date prior to 6 July 1973, even if a market
value had been determined for the purposes of a contemporaneous
disposal under the pre- FA 1973 information standards, e.g. on a
gift or on death (prior to 31 March 1971 - see below).
There are two other points to bear in mind.
- When the charge to CGT on death was abolished (for deaths after
30 March 1971) the open market value ascertained for Estate Duty on
a death became the acquisition price for CGT purposes. That works
for all such deaths on or after 6 July 1973, but for deaths between
31 March 1971 and 6 July 1973 it was provided that for the purposes
of establishing the acquisition price for CGT only, the new
statutory information standard was to apply even although it was
not relevant to the Estate Duty valuations.
- Where there has been a part-disposal before 6 July 1973 in
circumstances which make it necessary to establish the market value
of shares; and there is a subsequent disposal (either in part or
full) after 5 July 1973.
- The original computation of the chargeable
gain stands for the part-disposal before 6 July 1973.
- But the information provisions are applied
for the purposes of ascertaining the gain on the subsequent
disposal(s) [Para 5 Sch 11 TCGA 1992].
In practice valuers should not investigate the possibility
of reopening acquisitionvalues prior to 6 July 1973 unless the point is raised by
the taxpayer or agent.
Stamp Duty and Income Tax charges under section 62 ITEPA.
The provisions of s.272(3) do not, in terms, apply to valuations
for Stamp Duty or Income Tax under section 62 ITEPA, except for
ITEPA purposes where an election under section 431 has been
made.
Income Tax – other than section 62 ITEPA
The new employment related securities legislation introduced in
2003 adopts, in section 421 ITEPA, the same standard as for CGT
purposes.
