Successful valuations and negotiations results in significant CGT savings
Cluttons was instructed by the freeholder of a block of flats to provide capital gains tax valuations as at March 31, 1982, and remainder valuations for 2001 to 2007.
The freeholder’s property is a 62 flat mansion block in prime central London. The block is held on a headlease with an unexpired term of twenty nine years and a rising ground rent.
Over the years the freeholder has extended the headlease and a number of underlessees claimed 90 year lease extensions successfully under the Leasehold Reform, Housing and Urban Development Act 1993. As a result of these lease extensions, the freeholder was liable to pay capital gains tax.
Due to the complicity of this valuation, it was necessary to establish the transactions which gave rise to the receipts which triggered the freeholder’s liability for capital gains tax. Thereafter exact property details were required in order to carry out the tax valuations. These included the condition of the property, the floor area, and the layout at the relevant dates. On March 31, 1982 the block was unmodernised and later converted into a greater number of smaller self contained flats. The different layout and condition of the property were reflected in each of the valuations as at March 31, 1982, and the remainder valuation.
Details of all the leases to which the property is subject at the relevant dates of valuation were also required, as well as the ground rents passing and any deeds of variation, for example, commuting the headlease rent. Details of the premiums paid for any lease extensions and the dates of completion were also reflected in the valuation.
Successful negotiations with the District Valuer on both the March 31, 1982 and remainder valuations resulted in significant capital gains tax savings for the freeholder.
Return to