Zabavnik v R & C Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 20 August 2021 |
| Court | Upper Tribunal (Lands Chamber) |
[2021] UKUT 213 (LC)
Upper Tribunal (Lands Chamber)
Mark Higgin FRICS
Tax – Inheritance tax – Inheritance Tax Act 1984, s. 160– Three terraced houses – Analysis of comparable sales – Valuations determined at £830,000, £900,000 and £950,000.
The following cases were referred to in argument:
- IR Commrs v Gray (executor of Lady Fox (deceased)) [1994] BTC 8,034
- Akanwo (as personal representative for the estate of Akanwo Deceased) v R & C Commrs [2018] BTC 512
[1] These appeals concern the deemed disposal for the purposes of Inheritance Tax of three freehold houses known as 29 and 31 Tunis Road, London W12 7EZ and 76 Tunis Road, London W12 7EY (the “properties”) which were owned by Mrs Vida Zabavnik who died on 4 December 2014 (the valuation date). The appellant is Mr Bozidar Zabavnik who is Mrs Zabavnik's son and personal representative.
[2] On 21 August 2019 a Notice of Determination was served on the appellant by Her Majesty's Revenue and Customs (“HMRC”) under section 222(4A) of the Inheritance Tax Act 1984 (“the 1984 Act”) under which the deceased's freehold interests were valued as follows:
29 Tunis Road: £800,000
31 Tunis Road: £800,000
76 Tunis Road: £820,000
Mr Zabavnik appealed to the First-tier Tribunal (Tax Chamber) on 22 September 2019, saying that the correct valuation for the three properties in aggregate was £960,000. The appeal was referred under section 222(4) of the 1984 Act to the Upper Tribunal to determine the valuation dispute.
[3] The appellant appeared in person and was unrepresented.
[4] Mr Luke Wilcox of counsel appeared for the respondent (HMRC) and called Mr Daniel Newell, MRICS, of the Valuation Office Agency, as an expert valuation witness.
[5] The appeal was heard under the Tribunal's simplified procedure although evidence was given under oath. 6. I inspected the prope
[6] I inspected the properties on the morning of 12 July 2021 in the presence of Mr Zabavnik.
[7] In accordance with section 160 of the 1984 Act, the market value of any asset is defined as:
the price which the property might reasonably be expected to fetch if sold in the open market at that time [the valuation date]: but that the price should not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time
In this case, the value of the individual properties would not be reduced, in reality or notionally, by being sold as a whole entity at the valuation date of 4 December 2014.
[8] Tunis Road is almost entirely residential in nature and is situated approximately 350 metres northwest of Shepherd's Bush Green. It runs on a north south axis connecting with the A4020 Uxbridge Road at the southern end and with Stanlake Road at its northern most point. Shepherd's Bush Market Underground Station is within easy walking distance as are the Westfield London shopping centre and Queens Park Rangers ground at Loftus Road.
[9] No. 29 is located about halfway along Tunis Road on the western side. Originally a three storey, terraced Edwardian house of brick construction with a pitched slate roof, it has been converted in to three, self-contained one-bedroom flats. Although they are dated and the fittings might best be described as functional, all three are in reasonable condition. Most of the original windows have been replaced with modern PVC double glazed units. Two of the flats were let and occupied at the time of my inspection. Each flat has a reception room, a separate kitchen, a double bedroom and a bathroom. All of the flats have separate utilities and are equipped with gas central heating.
[10] Not surprisingly No.31 is situated next door to No.29 and is identically constructed. However, it is not divided into flats and was occupied by Mrs Zabavnik as her home and had been adapted to make it accessible for a disabled person. Again, the windows had been replaced with units that match the neighbouring property and the fittings such as kitchen cabinets are dated. The walls and ceilings have the original lathe and plaster finishes but there is some cracking, especially at the front of the house. A stairlift has been installed between the ground and first floors and the first-floor bathroom has been refurbished to provide a wet room with a hoist. The remaining accommodation comprises two reception rooms and a kitchen on the ground floor, two double bedrooms on the first floor and two double rooms, a box room and a further bathroom on the second floor. A gas central heating system serves the whole house. It is in reasonable condition.
[11] No.76 is located on the eastern side of the road, on the section that lies between its junctions with Swindon Road and Stanlake Road. It has much in common with the other two houses being a three storey Edwardian property in a terraced position...
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