When valuing property retrospectively, most weight should be attributed to evidence that would have been available to the valuer at the valuation date, but transactions in the same calendar year, after the valuation date, can help to confirm the state of the market.
The Upper Tribunal (Lands Chamber) has considered this issue in Chifley Holdings Ltd (BVI) v Commissioners of HM Revenue and Customs [2024] UKUT 301 (LC); [2024] PLSCS 170.
The case concerned the freehold value of 12 Chester Square, Belgravia, London SW1 for the purposes of the Annual Tax on Enveloped Dwellings (ATED), payable under the Finance Act 2013 by companies that own UK residential property worth more than £500,000. HMRC determined that as at the valuation date of 1 April 2017 the market value of the property fell within the £10m-£20m bracket. The appellant argued that it was under £10m.
The appellant acquired the property in 2011 for £9.5m and then spent £500,000 upgrading it. The parties’ experts relied upon comparables which all related to Chester Square but could not agree on the length of time after the valuation date within which comparables were to be referred to or which index should be applied to adjust comparables to their equivalent at the market conditions at the valuation date.
The tribunal decided that events after the valuation date, which would not have been known to either the valuer or a hypothetical buyer or seller, should be disregarded but that what comparable properties were selling for around the valuation date – particularly in relation to the subject property or very similar properties in close proximity – could provide retrospective assistance. The further the distance from the valuation date a post-review transaction was, the less weight should be applied to it. As for indexation, the Savills Central London House Index provided the most reliable guide to changes in the value of houses in the same general price bracket as the property.
Of the five comparables considered to be relevant in ascertaining the value at the valuation date, the most useful were no 10, which was close to and very similar to the property, and no 87, which was sold around the valuation date. No 62 was sold shortly after the valuation date and provided comfort that the analysis of no 87 was correct.
However, all the comparables produced a time-adjusted valuation in excess of £10m at the valuation date, as did an indexation of the purchase price of the property itself. The tribunal endorsed the HMRC valuation of the property of £11,750,000 at the valuation date.
Louise Clark is a property law consultant and mediator
