HMRC rewrites 1982-holding valuation rule for s135 exchanges

HMRC has rewritten the valuation instructions for section 135 share exchanges involving a 1982 holdingGOV, collapsing the previous quoted/unquoted split into a single paragraphGOV. The page no longer tells officers to use Extel to establish the 31 March 1982 value of quoted original sharesGOV, and the cross-reference to CG52050 for checking computations with Extel adjustment factors is goneGOV. The worked example illustrating the valuation — a 1982 holding of 10,000 £1 shares in Searchers Ltd taken over by quoted Trendsetters Ltd at three-for-one, with a later part-disposal — has been deleted.

Where the original shares were quoted on 31 March 1982, their value at that date may be publicly available; any 1982 value that is not publicly available must be referred to Shares and Assets Valuation, even if the later takeover is by a quoted companyGOV. The practical effect is a broader referral duty. Previously only unquoted-share valuations had to go to Shares and Assets ValuationGOV; now any 1982 value that is not publicly available must be referred, including quoted holdings whose 1982 price cannot be established from published sourcesGOV. The unchanged anchor remains that the valuation needed is of all the shares actually held on 31 March 1982, not merely the shares sold, and that a later takeover does not affect that valuation.

The substance of the deleted illustration survives elsewhere in the manual: the share-valuation page for 1982 holdings of unquoted shares carries the same Searchers and Trendsetters example to make the identical point that a valuation of Trendsetters shares as at 31 March 1982 bears no relation to the value of the Searchers holding, since the two were entirely different companies. That page also warns that valuation requests to Shares and Assets Valuation must state the suggested value per share by reference to the number of shares actually held at the time, to avoid per-share errors after later reorganisations.

For rebasing and indexation purposes the page confirms the standing position: where the original shares were held in a 1982 holding, the new shares or debentures received on the exchange are also held in a 1982 holding, and the valuation required is of the shares the taxpayer actually held on 31 March 1982.

Legal basis: section 135 of the Taxation of Chargeable Gains Act 1992GOV, applied to 1982 holdings by reference to the 31 March 1982 rebasing valueGOV.