Hatton v HMRC [2010] UKUT 195 (LC)

Analysis

The appellant appealed against a determination by HMRC under s221 of the Inheritance Tax Act 1984 that the value of a freehold interest held by the deceased in a property was £475,000 on the date of death. The appellant (the executor of the deceased’s will) contended that the value was £400,000. The appellant relied on the principal of an estate agents and valuer who based his valuation on his local knowledge of property in the area, his 25 years’ experience and two comparables. HMRC relied upon the evidence of a senior valuer attached to the Valuation Office Agency who based his valuation on six comparables adjusted to reflect movements in the residential property marker generally between the date when he assumed contracts were exchanged and the valuation date, adjusted to reflect the condition of the properties where apparent that a property had been improved and, where necessary, adjusted to reflect the presence of additional accommodation to bring a comparable into line with the property.

Held, dismissing the appeal:

1. 1) The onus was on the appellant to prove that the determination was wrong and this had not been discharged.
2. 2) The evidence of HMRC’s expert witness was to be preferred. The tribunal had reached the conclusion that the evidence of the appellant’s expert witness was not to assist the tribunal in arriving at the correct value of the appeal property but to justify his valuation figure. On two occasions the evidence of the appellant’s expert witness was misleading. First he had said in oral evidence that he had inspected the property in 2005 shortly after the date of death but had subsequently accepted, after checking his records, that he had first inspected the property in May 2007. Secondly his written submissions gave the impression that one of his two principal comparable properties was, if anything, more valuable than the property when in fact it was a much smaller house. On the other hand, HMRC’s expert was a straightforward witness who acknowledged the deficiencies in his valuation method and did the best he could with the information available.

JUDGMENT N J ROSE: [1] This is an appeal against the determination by the Commissioners of HM Revenue and Customs, under s221 of the Inheritance Tax Act 1984, that the value of the freehold interest held by Mrs Ilona Hatton deceased in a house known as 22 First Avenue, London, W3 7JR (the appeal property) …

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