BVR Logo 3 May 2022 | Issue 38-1

BVWire—UK is a free service from BVR focusing on the business valuation profession in the United Kingdom. We offer news and perspectives from valuation thought leaders, the High Courts, HMRC, the standard-setters, ICAEW, RICS, IVSC, and more.

Please be in touch with your perspectives, news, and ideas—and pass this issue along to colleagues (complimentary sign-up instructions are here).

OECD Transfer Pricing Guidelines still dominate HMRC valuation policies

Valuers should continue to assume that HMRC expect a well-supported comparable uncontrolled price (CUP) analysis, say Macfarlanes in a new analysis of current transfer pricing practise and revenue compliance.

If independent transactions cannot be found to support the CUP methods, “resale minus” and cost-plus methods are the next options recommended by the OECD and followed by HMRC. Profit split and transaction net margin methods are recommended for situations with “complex trading relationships involving highly integrated operations,” say the authors. “HMRC is open to exploring other methods if it is considered that they provide a stronger case for application of the arm’s-length transaction.”

There are no plans to change the small and medium business (SME) exemptions. Businesses with fewer than 250 employees or less than £50 million in turnover are not subject to transfer pricing valuations in the UK, with few exceptions.

HM Courts & Tribunals report a 50% increase in new divorce applications

As discussed in previous issues of BVWire—UK, business valuation experts who do divorce work can anticipate increased inquiries. While HM Courts & Tribunals Service normally accepts about 2,000 applications for divorce a week, that number has increased to 3,000 since the Divorce, Dissolution and Separation Act 2020 came into force on 6 April.

Couples waited for the new act: The long-delayed change allows married couples (and their financial experts) to issue divorce proceedings without assigning blame. Only a statement of irretrievable breakdown is needed, and it also makes it possible to file for divorce jointly, so couples can submit a mutual agreement on all points, including the value of jointly owned business assets. Previously, the only alternative to blaming one partner of adultery, desertion, or unreasonable behaviour was to go through a period of separation.

Kroll reports continued low eurozone risk-free rates, while US rates rise

Kroll continues to update UK cost of capital data at their Cost of Capital Resource Center. Kroll has left unchanged (until further notice) its recommended German normalized risk-free rate of 1.5% and its current eurozone equity risk premium range of 5.5% to 6.0% (from a German investor’s perspective). The U.S. comparables are 3.0% and 5.5%, respectively, driven by US Federal Reserve actions and inflation.

Kroll has published its recommended eurozone ERP and corresponding risk-free rate since 2019. They regularly reassess ERP and risk-free rate assumptions since they are essential inputs to any capital asset pricing model (CAPM) analysis.

May and June are great months for UK business valuation training

Business valuers will have their first opportunity to attend the ASA’s European Valuation Conference in Prague on 24 May, headlining a great calendar of webcasts and live events. The last ASA event was held in 2018. Though its focus is nearly entirely valuation for financial reporting, it’s still a good opportunity to meet colleagues. The ASA have announced that they’re expecting a record attendance of large-firm valuers—and that they’re also bringing in legal counsels to increase their focus on business disputes, litigation, and arbitration. The schedule for the European Valuation Conference is available here.

McKinsey’s Professor Marc Goedhart will give the keynote speech on “How to Reflect Uncertainty.”

The IVSC are also active with a webcast series the first weeks of June (sponsored by Kroll). See our “Dates for your diary” section to register for the sessions on intangibles, valuing digital assets, and “Valuation, Inflation, and Cost Control.”

The Society of Shares and Business Valuers next session is on minority interest discounts, with Sandra Mossios.

Dates for your diary

24 May: 3rd Annual European Valuation Conference, Prague

2 June: IVSC’s Analysing Intangibles, virtual, 14:00-15:00 BST

7 June: IVSC’s Valuation of Digital Assets, virtual, 15:00-16:00 BST

8 June: IVSC’s Valuation, Inflation and Cost Control, virtual, 16:00-17:00 BST

15 June: Society of Shares and Business Valuers’ Minority Interest Discounts With Sandra Mossios, London, 17:30-19:00 BST

21-29 June: ICAEW Practical Business Valuation, virtual classroom

7 September: Society of Shares and Business Valuers’ The Absence of Size Effect With Clifford Ang, London and virtual, 17:30-19:00 BST

13-15 September: IVSC Annual General Meeting, Fort Lauderdale, Fla.

3-5 October: 12th Annual International Valuation Conference, Riyadh, Saudi Arabia

19 October: Society of Shares and Business Valuers How to Lose at the Tax Tribunal With David Bowes, London and virtual, 17:30-19:00 BST

7 December: Society of Shares and Business Valuers’ Causation and Financial Losses: Factors to Consider With Prem Lobo, London and virtual, 17:30-19:00 BST

Want to share a news item? Have feedback or comments? Please contact David Foster at

Want to share a news item? Have feedback or comments? Please contact
David Foster at

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