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Inheritance tax, capital gains tax, probate and insurance

This is a specialist area of expertise where, for inheritance tax agricultural property relief, a knowledge of the case law based upon Antrobus 1 and 2 and McKenna is essential, and with capital gains tax valuations, valuations on transfer dates and at March 1982 are critical.

With regard to probate, Executors and their professional advisers should be aware that Section 160 of the Inheritance Tax Act 1984 states "the value at the time of any property shall for the purposes of this Act be the price which the property might reasonably be expected to fetch if sold in the open market at that time."

The Capital Taxes Office are now scrutinising closely the values of farmland and property being submitted to them. They regard the return of an unrealistically low value in an Inland Revenue account as negligence. If a value agreed with the District Valuer is considerably more than the valuer returned to them originally, they will make enquiries and if they feel appropriate, impose a penalty on the Executors. If a valuation report states it is a "probate valuation" the Capital Taxes Office will write automatically and ask the basis of valuation. A penalty is a personal responsibility of the Executors and not an expense of the Estate. A penalty can be as much as £1,500 plus a percentage of the Inheritance Tax payable.

Watsons carries out all such valuations in accordance with the RICS Appraisal and Valuation Manual (The Red Book).

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