Background

The client, a company in the care and social services sector sought a valuation when one of the joint shareholders passed away. FRP were jointly instructed by executors of the deceased’s estate and the remaining shareholder of the company to provide an independent assessment of the probate valuation of the shareholding in question. The tax implications of this valuation were also required in respect of inheritance tax payable by the beneficiaries of the estate and any capital gains tax that would arise on a subsequent sale of the shares.

Action

FRP’s Forensic Services team, led by Fiona Hotston Moore, was appointed as single joint expert on behalf of the parties and provided a comprehensive valuation report which considered the financial performance and financial position of the company, as well as sector specific research, in order to arrive at an independent view of fair market value for the company as a whole and the shareholding in question. As the company was trading profitably and also held significant assets in the form of freehold property, both an earnings-based and an asset-based valuation approach were undertaken, in order to determine the most suitable basis for valuation.

Outcome

The asset-based valuation meant that an expert valuation of the freehold property was required which the instructing parties had not previously appreciated. As such FRP advised the parties of this requirement and a valuation was obtained by them in order to ensure that the report could be finalised in line with the required timescale. Once the valuation was finalised a full tax analysis was undertaken to understand the liabilities expected to arise in respect of inheritance tax and capital gains tax. As the report was required as part of a probate application there was a strict deadline for submission of the report. FRP therefore acted quickly and efficiently in order to obtain the necessary information and produce the report within the given timeframe.