Peter Downey v HMRC

For inheritance tax valuation, comparable evidence must be assessed in context. Applying a price per square metre without testing the result against the range of market prices may overstate value where the property is materially larger and in worse condition than the comparables. Floor area and disrepair should be considered alongside the benefits and disadvantages a purchaser would perceive, including the lack of outdoor space.

Peter Downey and his sister inherited a 125-year leasehold maisonette on their uncle’s death on 20 April 2016. HMRC determined its inheritance tax value at £800,000, against the £515,000 reported by the estate, and upheld that determination on review. Mr Downey appealed to the Upper Tribunal. The property had 117 square metres of internal floor space, no outdoor space and substantial disrepair at the valuation date. The dispute concerned the value indicated by comparable sales, including how to account for condition, floor area and the absence of outdoor space.

1. Appeal allowed; the property’s value was determined at £670,000.
2. Under section 160 of the Inheritance Tax Act 1984, the relevant value was the price the property might reasonably have fetched on the open market at the valuation date. The Tribunal assessed that value from comparable sales and the property’s condition at that date.
3. The three most relevant sales were of three-bedroom flats without outdoor space. The best-condition comparable achieved £7,931 per square metre, but was only 79 square metres, compared with the subject property’s 117 square metres. The two comparables in fair condition each had a second bathroom. The evidence therefore required attention to the differences between the properties, as well as their price-per-square-metre figures.
4. Mr Newell was a good expert witness and his valuation approach was logical apart from his failure to stand back and test whether the resulting figure was realistic within the range of market prices at the valuation date. The subject property was an outlier in both size and condition. Applying a price-per-square-metre figure without adequately accounting for that position overstated its value. The marketing advice submitted by Mr Downey was not determinative but reinforced that conclusion.
5. The four comparables without outdoor space sold for adjusted prices between £626,567 and £753,132. Doing the best possible with the evidence, the Tribunal assessed the subject property, in very poor condition and with a single bathroom, below the £677,508 comparable at 61B Percy Road, despite its greater floor area. A value of £670,000 left scope for at least £130,000 of refurbishment and a potential future sale above £800,000, subject to the continuing disadvantage of no outdoor space.

1. Upper Tribunal (Lands Chamber) Appeal allowed; the property’s value was determined at £670,000: [2026] UKUT 228 (LC) .
2. HMRC Determined the property’s value at £800,000 and upheld that determination on review dated 30 January 2025.