From 31 March 2016 HMRC will withdraw its ‘post transaction valuation check’ (PTVC) service for agreeing income tax share valuations. Income tax PTVCs received after this date will not be accepted by HMRC.
The announcement to withdraw was only made on 15 February 2016, leaving little time for anyone wishing to use this service to submit their valuation to HMRC. Although the service was not mandatory, it was a useful tool for private companies wanting to gain certainty over their tax affairs.
HMRC state that the service is to be withdrawn because of resource constraints as well as the high acceptance rate of the valuations by HMRC without challenge (currently 90%).
Going forward, documentation to support the valuation will be essential. This could be an internal valuation, however, for increased comfort an independent third party valuation could be obtained.
For now HMRC will still agree valuations in advance for employee share schemes including EMI, CSOP, SIP and Employee Shareholder Status (ESS). However, HMRC have confirmed that they will be reviewing these services further to see how they might be “improved”.
If you would like any further information or assistance with an independent tax share valuation, please contact Tom Woodcock or Ruth Dooley.