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HMRC valuation submissions - if it ain't broke?

Posted by RM2 at 09:23 on 17 Oct 2016

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When submitting an Enterprise Management Incentive (EMI) valuation to HMRC for comment, a VAL231 form must be included with your submission. The form includes information like the company name, agent details, proposed values and number of share being offered under option. To date the form has been paper based and typically required a signature from a Director of the company of whom the shares are being valued.

A short time ago HMRC introduced an online version of the form which must be completed in full before it can be printed from the HMRC website.

As the online forms are less practical, until now RM2 has continued to use the paper based form. As of last week, HMRC are requesting only the new version of the form is used. The new online forms explicitly requests more information than the old form. Typically we would expect all of the information requested to be included in the valuation report itself, which begs the questions why change the system or even have the form at all?

The form requests:

  • The name of the company whose shares are the subject of the option
  • Company registration number
  • Country of Registration (if known)
  • HMRC office and reference (if known)
  • Contact details
  • Class and currency of share
  • Nominal value of the share
  • The event for which you want the valuation
  • The date you want the valuation for
  • Total number of options to be granted
  • Proposed AMV and UMV
  • If there is a valuation report
  • If share have been allotted since the date of the last accounts
  • Transactions in the shares in the last year
  • Dividends paid or declared since the last accounts.
  • Is there a prospect that there will be an opportunity for shares to be sold or exchanged?
  • Or is there a prospect of a flotation or other marketing event?
  • Any other relevant information such as background information that will help HMRC understand the company’s trade and circumstances, any change to the company’s share or loan capital which, at the occasion for valuation, is - completed or actively contemplated
  • A declaration at the end of the form confirming the company has given permission for the valuation to be submitted.

As an agent we liaise with our clients to gather the relevant information to compile our valuations. We then work on the valuations alongside our clients to ensure we come to the right result. It is once both we and our client are satisfied with the report we submit this to HMRC with the supporting information (accounts, articles, amending resolutions etc.). The new form almost duplicates the information provided and by having to add this information online means that we cannot get a client to sign the form in advance, therefore delaying the process.

We have spoken to HMRC regarding our position, as an agent who submits a number of valuations every week, and they have confirmed that as an agent we can sign the form instead of our clients provided they have given us permission to submit the valuation on their behalf.

To date the equivalent form for a Share Incentive Plan (SIP) valuation, the VAL230 form remains in paper form.