0
Chifley Holdings Ltd (BVI) v HMRC [2024] UKUT 00301 (LC)
The Upper Tribunal (Lands Chamber) has handed down its first appeal decision on the valuation of a multi-million-pound West End London home for the purposes of the Annual Tax on Enveloped Dwellings (‘ATED’), an annual tax payable by companies that own UK residential property worth more than £500k.
In finding that the property was worth more than £10m as argued by HMRC, the Upper Tribunal considered the relevance of and weight to be given to post-valuation date evidence, holding that while events after the valuation date which could not have been known to the valuer or hypothetical buyer should not be taken into account, post-transaction sales can be used to inform the valuer as to the state of the market at the time of the valuation. Addressing the potential tension between these two principles, the Upper Tribunal held (at paragraph 48) that:
“I accept that there may be a tension between those two principles, to the extent that some transactions might have been affected by impermissible events, and in that respect the valuer must be alive to outliers or sudden changes in market levels that might have been affected by post-date events, for instance a general election or a change to interest rates. The valuer must make a judgement as to whether the market, at the valuation date, anticipated a future event, which would be legitimate to take into account. With the passage of time, some market expectations become reality and some do not, and it is necessary to consider with any post-valuation date evidence whether something has changed in the intervening period which undermines the reliability of the evidence as a measure of the value of the subject property at the valuation date. As ever, valuation is an art.”
The Upper Tribunal also confirmed as regards post-valuation transactions that the further one moves away from the valuation date the less weight should be given to them as evidence, as they become progressively unreliable over time.
Finally, doubt was expressed by the Upper Tribunal as to whether the current RICS Professional Standard properly reflects the above principles of valuation as applied by the courts, arbitrators and tribunals.
The decision can be accessed here.
Katharine Elliot acted for the successful HMRC.
