Two valuations, a quarter of a million apart: Why the audit trail matters more than the sale price

There is a question worth asking of any valuation that lands on a probate file, and it takes about ten seconds. Did anybody actually go to the property?

Not long ago we were instructed on a probate property with land attached. Two auction houses were asked what it was worth. One opinion came back in the high three hundreds of thousands, with a range around it. The other set a guide roughly a quarter of a million pounds higher. Same property, same few weeks. The lower figure was produced without anyone attending. It was a desktop exercise. I have rounded the figures and removed the identifying details here, but the gap is real, and the gap is the point.

I am not going to tell you which number was closer to the truth, because for the argument I want to make it does not matter. When a file holds two numbers that far apart, the executor's problem is not arithmetic. It is evidence.

What the executor is actually signing

The statutory test is short. Under section 160 of the Inheritance Tax Act 1984, the value of property is "the price which the property might reasonably be expected to fetch if sold in the open market at that time". One sentence, and it has kept the tribunals busy for forty years. It does not tell you how to arrive at the price. It tells you what the price is supposed to represent.

The obligation sitting underneath it is the one people forget. Section 216(3A) allows personal representatives to submit a provisional estimate where they cannot ascertain an exact value, but only after making "the fullest enquiries that are reasonably practicable in the circumstances". That phrase is doing real work. It is a process standard rather than a numerical one. The account is not defective because the figure later turns out to be wrong. It is defective because the enquiries behind the figure were thinner than they reasonably could have been.

And the person carrying that is named. Under section 200, the deceased's personal representatives are liable for the tax attributable to estate property. Not the auctioneer who gave the opinion, and not the firm that passed it on.

What happens after the account goes in

Most executors submit the account and treat the valuation question as closed. HMRC does not. The Inheritance Tax Manual is direct about it. IHTM23002 records that most land in the UK chargeable to tax on death is referred to the Valuation Office Agency, with a small set of exceptions. The VOA forms its own opinion, and where that opinion differs from the account, the executor is in a negotiation.

That negotiation is where the file gets tested. The District Valuer is not obliged to accept a number because a firm with a recognisable name produced it. What moves the position is what sits behind the number. The comparables relied on. The condition of the building at the date of death. Whether anyone measured the land or walked the boundary. Whether the figure was struck as at the date of death or as at the date somebody happened to ask. I have had this conversation on a file where the only supporting document was a two-line email from an agent, and the solicitor acting was surprised to learn that the email was the entire evidential case.

A desktop appraisal and a valuation are different products

I want to be careful here, because the argument could easily overreach. A desktop appraisal is not worthless, and an agent who knows a local market can land closer to the money than a formal valuation produced by someone who does not. Speed has value too, particularly now that the grant is no longer the bottleneck and the property sets the timetable on most estates.

The distinction is about what each product is for. A valuation carried out under the RICS Valuation Global Standards, the Red Book, whose current edition took effect on 31 January 2025, is produced to a defined basis of value by a valuer with stated liability, and inspection is a standard part of it. An agent's appraisal has no defined basis of value and carries no liability to the person relying on it. It is an opinion offered in the hope of winning the instruction, which is a perfectly honest thing for it to be and a poor thing to hand a District Valuer as your evidence.

On the property I opened with, the gap between the two figures is largely explained by the fact that one valuer had walked the ground and the other had not. Land that has to be walked. Buildings whose condition cannot be read from an aerial image. Access arrangements that only make sense in person. None of that reaches a desktop.

Who is giving the opinion, and what they want from it

There is one more thing worth putting on the file, and it is a little uncomfortable. An auctioneer asked to value a property they hope to be instructed to sell is not a disinterested party. I am not accusing anyone of bad faith. It is the structure of the arrangement, and it pulls in both directions at once. A high figure wins the instruction. A modest reserve makes the lot easier to clear on the day. Which pressure dominates varies by firm and by market, and an executor is in no position to work out which applied to them.

They do not need to. They need to notice that the incentive exists, and to record that they noticed. A valuation obtained from somebody with no interest in the subsequent sale is a different kind of document from one obtained from the party hoping to win the instruction. Where an estate can afford both, the file is a great deal stronger for holding both.

The penalty follows the behaviour

Schedule 24 of the Finance Act 2007 lists an account under section 216 or 217 IHTA 1984 among the documents it bites on. Where an inaccuracy in that account understates the tax, the penalty turns on how the inaccuracy came about. Careless behaviour, defined as a failure to take reasonable care, attracts up to 30% of the potential lost revenue in a domestic case. Deliberate and unconcealed takes it to 70%.

Read that against section 216(3A). HMRC is not asking whether the executor was clever. It is asking whether they took reasonable care, and that is a question about process. Process is something a file either records or does not. An executor who obtained one inspection-based valuation and one desktop opinion, noticed the gap, and wrote down why they went with the higher of the two is in a defensible position even if the property later sells for less. An executor who took the lower number because it arrived first has nothing to say when asked why.

The number is not final, and that cuts both ways

There is relief available if the property sells for less than the death value. Form IHT38 allows a claim for loss on sale of land where the sale takes place within four years of death, made by the person liable for the tax on that land. The figure on the account is not a one-way door.

But the relief assumes the death value was arrived at properly to begin with, and it does nothing about the other direction. If the account understates the value and the DV says so, there is no equivalent comfort waiting. There is a correction, and possibly a penalty on top of it.

That four-year window also interacts with something that gets overlooked. The eventual sale price is not purely a function of the market. It is a function of what happened to the building in the meantime. A property that stood empty and unheated through a winter sells for less than one that was looked after, and if nobody recorded its condition at the date of death, the executor cannot show a valuer which of the two they are dealing with. I have set out the security and key control position on professionally held vacant property separately. The valuation point here is narrower. Condition at the date of death is a fact with a very short shelf life, and it survives only if somebody wrote it down at the time.

A stake in the ground

When two valuations on the same property disagree by a quarter of a million pounds, the executor cannot protect themselves by picking the right one. Nobody knows which is right until it sells, and by then the account has gone in and the tax has been paid. What protects them is the file. Being able to show which valuation was preferred, on what evidence, what was done about the gap, and what the property was actually like on the day the value was struck.

In my view the working rule is simple enough. On any estate where the property is the material asset, get one valuation from somebody who has been to it. Keep every opinion the file receives, including the one that was not used, because a discarded valuation is evidence of enquiry and a missing one looks like a choice. Write the reasoning down while it is fresh, not two years later when the DV asks. A sale price is a single number that arrives long after the decisions were made. The audit trail is what the executor has in the meantime, and it is the only part of this they control.

I would be interested to hear from probate solicitors and professional executors on this. Whether you recognise the two-numbers problem from your own files, or whether you have a protocol at valuation stage that handles it better than what I have described here. You can find me at [email protected] or on LinkedIn.

At Prospect PS we record the condition of a property with dated evidence from the day we take it on, because a valuation defended two years later is only as good as what the file can still show about the day it was made.