Guide on Valuation Procedures for Compliance and Enquiry Cases in the UK

When HMRC may ask for a valuation in an SDLT enquiry

During a Stamp Duty Land Tax enquiry, HMRC may ask valuation specialists to review a transaction if it thinks the figures used do not reflect the true value relevant for SDLT. This often happens where the deal is not at arm’s length, the price has been split between land and other assets, or the buyer gives non-cash consideration. The compliance officer stays in charge of the enquiry, while specialist valuers advise on land, buildings, or other assets.

• Valuation issues usually arise where HMRC suspects the SDLT has been reduced by using figures that are below market value or by allocating too much of the price to non-land assets.
• Common risk areas include connected-party or non-arm’s-length transactions, mixed purchases of land and other assets, and prices set just below SDLT thresholds.
• If the buyer pays with assets, services, deferred rights, or other non-cash value, HMRC may need that consideration to be valued for SDLT purposes.
• The Valuation Office Agency generally advises on land and buildings, while Shares and Assets Valuation deals with certain non-land assets such as goodwill, intellectual property, and unquoted shares.
• Whether an apportionment is accepted will depend on the facts and evidence, such as contracts, valuation reports, asset lists, and comparable transactions.
• The HMRC manual explains internal process rather than the full law, so the final SDLT position still depends on the legislation and the specific facts of the transaction.

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When HMRC asks for a valuation during an SDLT enquiry

This page explains when a valuation may become relevant in a Stamp Duty Land Tax enquiry, who does that valuation work, and why it matters. The source material is an HMRC manual page about internal liaison between compliance staff and valuation specialists. Although it is written for HMRC staff, it helps readers understand the kinds of transactions that may attract valuation scrutiny.

What this rule is about

SDLT is often calculated by reference to the chargeable consideration for a land transaction. In straightforward cases, that may simply be the price paid in cash. But some transactions are more complicated. The stated price may not reflect market value, the total price may have been split between land and other assets, or the buyer may be giving something other than cash.

In those cases, HMRC may need specialist valuation input during an enquiry. The purpose is not to reopen every transaction. It is to check whether the SDLT position has been understated because the land, buildings, or other assets have been valued in a way that reduces the tax.

What the official source says

The HMRC manual says that, where a valuation is needed during an enquiry, the compliance caseworker remains in charge of the enquiry. The valuer supports that work and acts on the caseworker’s instructions.

The manual identifies several situations where a valuation may be needed:

• the transaction is not at arm’s length and HMRC has reason to think it is not at market value;
• the price is just below a tax threshold and has been apportioned between land and other assets;
• HMRC believes the SDLT may have been artificially reduced by manipulating asset values; and
• the consideration includes something other than cash, such as assets or services.

The source also explains which valuation teams may be involved. Shares and Assets Valuation deals with certain non-land assets, such as unquoted shares, goodwill, intellectual property, livestock, ships, aircraft, caravans, and some rights to deferred consideration. The Valuation Office Agency provides valuation advice on land and buildings, including apportionments, large land portfolios, some rights to unascertainable consideration, lordships of the manor, and some types of free-standing plant and machinery.

What this means in practice

If HMRC opens an enquiry into an SDLT return, it may not accept the figures used in the transaction documents at face value. That is especially likely where the pricing structure affects the SDLT result.

A common practical issue is apportionment. A buyer may acquire land together with other items and allocate part of the total price away from the land. In principle, that can be legitimate if the figures reflect genuine values. But if the allocation appears designed mainly to keep the land price below an SDLT threshold, HMRC may ask a valuer to test whether the apportionment is realistic.

Another issue is non-cash consideration. SDLT does not become irrelevant just because the buyer pays with assets, services, or some other form of value. If the consideration is not simple cash, its value may need to be established.

The same applies to transactions between connected or otherwise non-arm’s-length parties. The fact that two parties agree a figure does not necessarily settle the SDLT analysis if HMRC has grounds to think the figure does not reflect the true value relevant to the tax position.

The manual also shows that HMRC separates responsibility. The compliance officer runs the enquiry. The valuer provides specialist input. For taxpayers and advisers, that means valuation points are usually part of a wider enquiry rather than a separate process.

How to analyse it

If a valuation issue may arise, the sensible questions are:

• What exactly is being acquired: only land, or land plus other assets or rights?
• How has the total consideration been calculated?
• Is any part of the consideration non-cash, deferred, contingent, or otherwise difficult to value?
• Are the parties dealing at arm’s length?
• Has the price been split between land and non-land assets, and if so, on what basis?
• Does the apportionment have a clear commercial and evidential basis, or does it mainly appear to reduce SDLT?
• What evidence supports the figures used, such as contracts, valuation reports, asset schedules, or comparable transactions?

It is also important to identify which valuation discipline is relevant. Land and buildings will usually fall within the VOA’s area. Other assets may require specialist input from Shares and Assets Valuation. In mixed transactions, more than one valuation issue can arise at the same time.

Example

A company buys a site together with equipment and some associated intangible assets for a single overall price. The amount allocated to the land is set just below an SDLT threshold, with a substantial amount allocated to the other assets. HMRC opens an enquiry and questions whether the split reflects real values. The compliance officer remains responsible for the enquiry, but may ask the VOA to consider the land valuation and, if relevant, ask Shares and Assets Valuation to consider the non-land assets. If HMRC concludes that the land element was undervalued, the SDLT calculation may be increased.

Why this can be difficult in practice

Valuation is often fact-sensitive. There may be no single obviously correct figure, especially for unusual assets, bundled transactions, deferred rights, or assets with limited market comparables.

Apportionment can also be contentious. A transaction may genuinely include land and non-land assets, and the parties may have commercial reasons for the way the price is allocated. But where the allocation has a significant SDLT effect, HMRC may test it closely.

The source material is an internal manual, not the legislation itself. It shows when HMRC staff may seek valuation assistance, but it does not by itself set out the full legal rules for how chargeable consideration must be determined in every case. The legal outcome still depends on the legislation and the facts of the transaction.

Another practical difficulty is that the enquiry is managed by the compliance caseworker, not by the valuer. So a valuation disagreement may sit alongside wider questions about the transaction structure, documentation, and the correct SDLT treatment overall.

Key takeaways

• HMRC may seek specialist valuation input where the SDLT result depends on whether stated figures reflect genuine values.
• Valuation issues commonly arise in non-arm’s-length deals, mixed purchases, threshold-sensitive apportionments, and non-cash consideration.
• The compliance officer runs the enquiry, while valuation specialists advise on land, buildings, or other assets depending on what is being valued.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Valuation Procedures for Compliance and Enquiry Cases in the UK

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