The recent case in which the Inland Revenue succeeded in raising a tax assessment based on the value of a property transaction which was ‘closed’ under the self-assessment rules and which itself had been based on a professional valuer's advice has caused a great deal of consternation among taxpayers and professional advisors. The normal rule under self-assessment was thought to be that if the transaction remained unqueried at the end of the year after the 31 January filing deadline it would (provided the relevant return was submitted on time) be ‘safe’.
The Revenue has now issued guidance that if the ‘additional information’ box of the tax return is used and a statement made that the valuation used was carried out by an independent and qualified valuer (who must be named) and on an appropriate basis then, provided those statements are true, the taxpayer can rely on being protected from an enquiry.
The same approach follows where the taxpayer wishes to use an interpretation of tax law which they know varies from that used by the Revenue. Provided the details are fully disclosed, a ‘discovery assessment’ will not be issued.
For more details, see the Inland Revenue website at www.inlandrevenue.gov.uk/news/veltema_back_note.pdf