In Netley v HMRC [2017] TC05904 the Court considered the valuation of unquoted shares for tax purposes, with particular emphasis on the relevance of quoted share prices and a lengthy analysis of the information that could be expected to be available to a prospective purchaser.  This was the lead case on the market value of shares in Frenkel Topping Group Plc (FTG).

On 28 July 2004 two key events occurred: Mr Netley (and a number of other shareholders) gifted some of their shares to charity and, FTG was floated on the AIM.

  • Mr Netley claimed tax relief on the gift to charity claiming market value of the shares was 48p, the price at which the shares were being traded on AIM.
  • HMRC argued the actual market value was 8p, which was closer to the amount he subscribed for in June 2004.

The First Tier Tribunal (FTT) held that

  • AIM shares are not quoted for the purposes of the tax legislation, so the price at which it was traded was not determinative
  • The actual value was 17.5p per share; this was a figure used shortly before the flotation and in line with a figure calculated using maintainable earnings and a multiplier derived from price earnings ratios of similar quoted companies.


As with any valuation, the individual facts are key to the actual value. However, the verdict analyses many factors in detail, particularly the extent to which quoted prices should be taken into account and what information is deemed to be available to a prospective purchaser.  The full case is, therefore, well worth a read.

Jonathan Netley v HMRC [2017] UKFTT 0442 (TC)