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HMRC internal manual

Inheritance Tax Manual

Valuing the partnership interest: Freehold and leasehold property

Whether or not a particular property is partnership property is a question of fact. If a particular property is shown on the balance sheet, but all the partners do not share legal title, you should verify that the property is actually partnership property. You will need to consider how the property was purchased, used and regarded by the partners over time.

For valuation purposes, you should obtain full details of the property on form IHT405 and then refer to the Valuation Office Agency (VOA) (IHTM23002) (except in the rare case involving fetters IHTM25120).  You should send the VOA a copy of the partnership deed if this is available and tell them

  • whether or not the property is partnership property
  • the deceased partner’s share to be valued
  • the size of all the partners beneficial interests in the partnership assets, or, if that information is unavailable, you should give them details of the number of partners and the way profits are divisible between them
  • refer the VOA to Ch1B Section 19

Any case where the taxpayer questions the basis of valuation of partnership property or a discount is claimed on the VOA’s opinion of value should be referred to Technical.