Commentary

I7.120 Value of a business or interest in a business

IHT, trusts and estates

I7.120 Value of a business or interest in a business

Value of the business and excepted assets

I7.120 Value of a business or interest in a business

IHTA 1984, s 110 provides that for the purposes of business property relief (BPR):

  1.  

    •     the value of a business or interest in a business is taken to be its net value

  2.  

    •     the net value of a business is the value of the assets used in the business (including goodwill) reduced by the aggregate amount of any liabilities incurred for the purposes of the business

  3.  

    •     in ascertaining the net value of an interest in a business, assets or liabilities other than those by reference to which the net value of the entire business would fall to be ascertained, are ignored

HMRC's IHT Manual contains some examples of the operation of this provision, as follows1:

  1.  

    •     an interest by way of loan, such as a partnership loan account, is a liability of the business and so is not part of its net value under IHTA 1984, s 110(b)

  2.  

    •     a partner's income tax liability in respect of his share of the partnership profits is not a liability incurred for the purposes of the business, so it should not be deducted in calculating the net value of the partnership

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