Chifley Holdings Ltd (BVI) v The Commissioners For HMRC

In a retrospective open-market valuation, events occurring after the valuation date which were not known, and could not have been known, at that date must be disregarded. A sale shortly after the valuation date may nevertheless be evidence of the market at that date. Its weight reduces as time passes and depends on whether later events or changed expectations undermine its reliability.

Comparable transactions must be analysed on a consistent measurement basis. Where the market values comparable houses by gross internal area, integral garage space is included unless evidence justifies a differential. Time adjustments should precede physical adjustments where fixed and percentage adjustments are combined.

The appellant challenged HMRC’s determination that the freehold market value of 12 Chester Square, Belgravia, on 1 April 2017 exceeded £10 million for Annual Tax on Enveloped Dwellings purposes.

The appeal was transferred from the First-tier Tribunal (Tax Chamber) and was ultimately determined on written representations. The parties relied on competing expert valuation evidence and transactions involving houses in Chester Square.

The central issues were the admissible weight of post-valuation-date transactions, the appropriate measurement basis for an integral garage, the suitable market index, and the adjustments required to compare the transactions with the appeal property.

1. Appeal dismissed. The Tribunal determined that the property’s market value on 1 April 2017 was £11,750,000. It therefore fell within the £10–20 million ATED band.

2. The agreed statutory basis was the open-market definition of market value in section 98(8) of the Finance Act 2013, read with section 272(1) of the Taxation of Chargeable Gains Act 1992. The Tribunal held that later events unknown at the valuation date must be excluded. However, transactions shortly after that date may assist in identifying the market at that date, provided that their reliability is tested for intervening changes. Their evidential weight becomes progressively weaker with time: Castlefield Property Limited v National Highways Limited [2023] UKUT 217 (LC); Segama v Penny Le Roy [1984] 1 EGLR 109.

3. The Tribunal gave no weight to the appellant’s principal 2018 comparables. It instead used five agreed comparables and two additional transactions occurring before, or in the months immediately after, the valuation date.

4. The appropriate basis of analysis was gross internal area, including the integral garage. The evidence did not establish that the garage should attract a substantially lower rate per square foot. The Tribunal preferred the gross internal area of 4,277 square feet.

5. The Savills Central London House Index was a more reliable guide than the Westminster Land Registry index for houses in the relevant prime central London price range. Comparable prices were first adjusted for time. Consistently with The Earl Cadogan v Faizapour and Stephenson [2010] UKUT 3 (LC), time and other non-physical adjustments were made before fixed adjustments for physical characteristics.

6. The most useful comparisons supported a value range of approximately £11.7 million to £11.88 million. HMRC’s expert valuation of £11.75 million was accepted.

• Upper Tribunal (Lands Chamber): dismissed the appeal against HMRC’s valuation determination and determined the market value at £11,750,000.

• First-tier Tribunal (Tax Chamber): Judge Bailey transferred the appeal to the Upper Tribunal by an order dated 2 August 2023 (TC/2023/00236).