Tax valuation and private clients

Nobody wants to pay more tax than absolutely necessary.

Representative clients include: Cable & WirelessDisneyFoxGucciJJB SportsNewsCorpPepsiCoReed Elsevier and Stan James.

Two of our principals held senior positions in UK Government’s valuation division and our non-contentious tax work typically includes valuations of companies and shareholdings, transfer pricing studies and appraisal prior to a contemplated transfer of an asset to a low tax jurisdiction, in addition to advice regarding royalty rates. Requirements are led by estate taxes and other tax statutes (CGT, SchE, SD and IHT) worldwide.

The Inland Revenue gain significant advantage by combining the skills of the Inspectorate and Shares Valuation (“SV”) and while this is common practice by Governments whenever corporate transactions are an issue it is not often the case in the private sector.

Concerning intellectual property tax authorities take a global perspective. Understanding and keeping track of where IP value is created, maintained, managed and developed, particularly within a group is important in managing the tax risk exposure of any business and in reducing confrontations with Inland Revenues as to the way you want to run your business.

A valuable tax regime for IP including R&D and intangibles (goodwill, patents, trademarks, brands, design and copyright and much more) is now available to companies. Tax advisors are creating structures that satisfy the commercial tests to obtain tax relief on our valuations. Relief also applies to expenditure on intangibles such as patents and trademarks and their licensing. A flat rate of 4% annual allowance can be claimed.

The transfer pricing rules for large companies have been extended to all transactions with connected businesses, not just cross-border ones. This will mean that any large company may require our expertise to help them calculate their taxable profits by reference to an arms length price.

This will have a major impact on connected business and groups of companies that trade solely within the UK.

OECD Transfer Pricing Guidelines have alluded to the difficulty of applying the arm’s length principle to control transactions involving intangible property. Valuation and economic analysis must take place from the perspective of both transferor and transferee, which is no more than what expert valuers do when advising on sales and IP license negotiations.

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