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Pre-transaction share valuations

There has been some uncertainty as to whether the policy announced ten years ago still remains in force and so HMRC Share Valuation have recently reconfirmed their policy on pre transaction valuations.

In addition to valuations agreed in advance for EMI awards and some other approved schemes, there is an informal arrangement whereby HMRC may agree share valuations in advance of proposed offers of shares to employees.

HMRC consider that the number of occasions they will agree such solutions will be small and they will only contemplate such valuations where the following conditions are satisfied:

  • not less than 25 employees;
  • transaction should be transparent with no side issues complicating tax liabilities or values;
  • the facts underlying the valuation are clear; and
  • HMRC engagement in the valuation is unlikely to lead to prolonged contention.

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