The most common situations where a formal share or business valuation is required include:
Each of these situations calls for a different approach, and the acceptable valuation method can vary depending on the type of asset and HMRC’s own published guidance.
For unquoted shares, shares in private companies that aren’t traded on a recognised exchange, there is no single definitive answer. A valuation is, in effect, an informed and evidence-based opinion, and it needs to be one that HMRC will accept or that can be defended if challenged.
The most commonly used approaches include earnings-based methods (applying a multiple to the company’s maintainable profits), asset-based methods (particularly relevant where a business holds significant property or investments), and dividend yield methods. In practice, the right approach depends on the nature and size of the business, the level of the shareholding being valued, and what the valuation is being used for.
Minority interests, where someone holds less than a controlling stake, will typically attract a discount to reflect the limited influence that comes with a smaller shareholding. The size of that discount is itself a matter of judgement, and one that HMRC’s Shares and Assets Valuations (SAV) team will often want to discuss.
Where a valuation needs to be agreed with HMRC, for example, to set the exercise price on an EMI option or to settle an estate, our team can handle the process on your behalf. This means preparing a robust, well-evidenced submission, engaging with HMRC’s SAV team directly, and negotiating where there is room to do so.
Getting this right at the outset saves time and, in many cases, money. A poorly prepared submission or an unsupported figure can lead to protracted correspondence, higher values being imposed, and unnecessary tax exposure. We aim to reach an agreed position efficiently and on the best terms available.
If you need a share or business valuation, whether for tax purposes, a transaction, or an employee share scheme, get in touch with our expert tax team to see how we can help.
We love meeting new, exciting businesses. Get in touch with our team to see how we could enhance and protect your financial position.
Or if you’d prefer to speak to someone directly just give us a call on: 08000 664 664 or email: hello@wrpartners.co.uk.
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