Share Valuation Test Case 6th June 2015 Mr & Mrs Foulser v HMRC: interesting test case on valuing shares in unquoted company. Business owners may only have to value shares in their family company on a few occasions during their lifetime (eg for commercial share transfers, gifts or capital taxes calculations), but the numbers involved are likely to be material. So a recent test case is helpful in shedding further light on what the Courts consider to be the correct basis for such valuations. In this case, as you would expect, both parties advanced arguments in support of extreme valuations (initially £14m apart). The taxpayer wished to use the BDO P/E index applied to an adjusted maintainable profit figure, whilst HMRC wished to use a P/E multiple extracted from a simple quoted business. Further differences existed concerning control premiums and minority shareholding discounts. The Tribunal found flaws in both valuations, although favoured the HMRC basis, with adjustments for the discounts applied. As always, information is king, and this example further helps our predictions on how Courts might arrive at other future unquoted share valuations. Blog entry by: Andrew Winearls.