I am looking at the valuation of foreign assets for UK IHT purposes as the deceased was UK domiciled and resident at the date of death. Unfortunately, advice was not taken prior to becoming deemed/actually UK domiciled to create an excluded property trust although the individual had a foreign domicile of origin so all foreign assets are part of the estate.
When looking at the discount applied by the foreign valuation team for property investment company shares this is much lower than the minority discount we would typically apply in the UK. For example a discount of 20% has been applied for a shareholding less than 5% in a property investment company. The related property rules are not in point. Just to note that the minority discount was not specific to the shareholding in question but noted as applying to any minority shareholding below 50%.
We can obviously err on the side of caution and accept the foreign valuation as is but I can’t see anything within the legislation which requires us to value in accordance with the principles of the country concerned rather than using standard UK principles of valuation. Looking at the valuation itself the method is net asset value and would pretty much tie in with a UK valuation in all regards other than the minority discount.
The country in questions has primary taxing rights on the shares but there would still be UK IHT due if we accepted the lower minority discount.
When looking at foreign valuations previously the valuation itself has not included any discount and simply valued the company as a whole so I would usually include a discount as appropriate.
Any experience of HMRC applying foreign rules for determining fair value or other thoughts?