[0] Section 216 of the Inheritance Act 1984 is entitled 'Delivery of accounts' and is a substantial provision. It reads:

'(1) Except as otherwise provided by this section or by regulations under section 256 below, the personal representatives of a deceased person and every person who-

(a) is liable as transferor for tax on the value transferred by a chargeable transfer, or would be so liable if tax were chargeable on that value, or

(b) is liable as trustee of a settlement for tax on the value transferred by a transfer of value, or would be so liable if tax were chargeable on that value, or

(bb) is liable under section 199(1)(b) above for tax on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer, or would be so liable if tax were chargeable on that value, or

(bc) is liable under section 200(1)(c) above for tax on the value transferred by a chargeable transfer made on death, so far as the tax is attributable to the value of property which, apart from section 102(3) of the Finance Act 1986, would not form part of the deceased's estate, or would be so liable if tax were chargeable on the value transferred on the death, or

(bd) is liable under section 201(1)(b), (c) or (d) above for tax on the value transferred by a potentially exempt transfer which is made under section 52 above and which proves to be a chargeable transfer, or would be so liable if tax were chargeable on that value, or

(c) is liable as trustee of a settlement for tax on an occasion on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79), or would be so liable if tax were chargeable on the occasion,

shall deliver to the Board an account specifying to the best of his knowledge and belief all appropriate property and the value of that property.

(2) Where in the case of the estate of a deceased person no grant of representation or confirmation has been obtained in the United Kingdom before the expiration of the period of twelve months from the end of the month in which the death occurred-

(a) every person in whom any of the property forming part of the estate vests (whether beneficially or otherwise) on or at any time after the deceased's death or who at any such time is beneficially entitled to an interest in possession in any such property, and

(b) where any of the property is at any such time comprised in a settlement and there is no person beneficially entitled to an interest in possession in that property, every person for whose benefit any of that property (or income from it) is applied at any such time,

shall deliver to the Board an account specifying to the best of his knowledge and belief the appropriate property vested in him, in which he has an interest or which (or income from which) is applicable for his benefit and the value of that property.

(3) Subject to subsections (3A) and (3B) below, where an account is to be delivered by personal representatives (but not where it is to be delivered by a person who is an executor of the deceased only in respect of settled land in England and Wales), the appropriate property is-

(a) all property which formed part of the deceased's estate immediately before his death, other than property which would not, apart from section 102(3) of the Finance Act 1986, form part of his estate; and

(b) all property to which was attributable the value transferred by any chargeable transfers made by the deceased within seven years of his death.

(3A) If the personal representatives, after making the fullest enquiries that are reasonably practicable in the circumstances, are unable to ascertain the exact value of any particular property, their account shall in the first instance be sufficient as regards that property if it contains-

(a) a statement to that effect;

(b) a provisional estimate of the value of the property; and

(c) an undertaking to deliver a further account of it as soon as its value is ascertained.

(3B) The Board may from time to time give such general or special directions as they think fit for restricting the property to be specified in pursuance of subsection (3) above by any class of personal representatives.

(4) Where subsection (3) above does not apply the appropriate property is any property to the value of which the tax is or would be attributable.

(5) Except in the case of an account to be delivered by personal representatives, a person shall not be required to deliver an account under this section with respect to any property if a full and proper account of the property, specifying its value, has already been delivered to the Board by some other person who-

(a) is or would be liable for the tax attributable to the value of the property, and

(b) is not or would not be liable with him jointly as trustee;

and a person within subsection (2) above shall not be required to deliver an account under that subsection if he or another person within that subsection has satisfied the Board that an account will in due course be delivered by the personal representatives.

(6) An account under the preceding provisions of this section shall be delivered-

(a) in the case of an account to be delivered by personal representatives, before the expiration of the period of twelve months from the end of the month in which the death occurs, or, if it expires later, the period of three months beginning with the date on which the personal representatives first act as such;

(aa) in the case of an account to be delivered by a person within subsection (1)(bb)[or (bd) ] 13 above, before the expiration of the period of twelve months from the end of the month in which the death of the transferor occurs;

(ab) in the case of an account to be delivered by a person within subsection (1)(bc) above, before the expiration of the period of twelve months from the end of the month in which the death occurs;

(ad) in the case of an account to be delivered by a person within subsection (1)(c) above, before the expiration of the period of six months from the end of the month in which the occasion concerned occurs;

(b) in the case of an account to be delivered by a person within subsection (2) above, before the expiration of the period of three months from the time when he first has reason to believe that he is required to deliver an account under that subsection;

(c) in the case of an account to be delivered by any other person, before the expiration of the period of twelve months from the end of the month in which the transfer is made or, if it expires later, the period of three months beginning with the date on which he first becomes liable for tax.

(7) A person liable for tax under section 32 or 32A, 79 or 126 above or under Schedule 5 to this Act shall deliver an account under this section before the expiration of the period of six months from the end of the month in which the event by reason of which the tax is chargeable occurs.'

[1] In HM Government guidance, entitled 'Guidance VOA Litigation and Settlement Strategy', headed 'Resolving Non-Domestic Rating and Council Tax Disputes', subheaded 'VOA’s Litigation and Settlement Strategy', under 'Scope and purpose', it states, in paragraph 3:

'The role of the VOA in relation to HM Revenue & Customs (HMRC) administered taxes (Inheritance Tax, Capital Gains Tax etc) is to support litigation conducted by HMRC by providing valuation expert witnesses as required. The VOA does not initiate or settle such litigation...'

HMRC's Litigation and Settlement Strategy (rather that VOA's Litigation and Settlement Strategy) is applicable to litigation conducted by HMRC.

[2] The Inheritance Act 1984 contains over 287 sections, and 12 Schedules. It is a substantial piece of legislation. But, it is possible to set out some extracts from some core provisions. 

Section 1 - Charge on transfers

'Inheritance tax shall be charged on the value transferred by a chargeable transfer.'

Section 2 - Chargeable transfers and exempt transfers

'(1) A chargeable transfer is a transfer of value which is made by an individual but is not (by virtue of Part II of this Act or any other enactment) an exempt transfer.

(2) A transfer of value made by an individual and exempt only to a limited extent -

(a) is, if all the value transferred by it is within the limit, an exempt transfer, and

(b) is, if that value is partly within and partly outside the limit, a chargeable transfer of so much of that value as is outside the limit as well as an exempt transfer of so much of that value as is within the limit.

(3) Except where the context otherwise requires, references in this Act to chargeable transfers, to their making or to the values transferred by them shall be construed as including references to occasions on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79), to their occurrence or to the amounts on which tax is then chargeable.'

Section 3 - Transfers of value

'Subject to the following provisions of this Part of this Act, a transfer of value is a disposition made by a person (the transferor) as a result of which the value of his estate immediately after the disposition is less than it would be but for the disposition; and the amount by which it is less is the value transferred by the transfer.

(2) For the purposes of subsection (1) above no account shall be taken of the value of excluded property which ceases to form part of a person's estate as a result of a disposition.

(3) Where the value of a person's estate is diminished, and the value-

(a) of another person's estate, or

(b) of any settled property, other than settled property treated by section 49(1) below as property to which a person is beneficially entitled,

is increased by the first-mentioned person's omission to exercise a right, he shall be treated for the purposes of this section as having made a disposition at the time (or latest time) when he could have exercised the right, unless it is shown that the omission was not deliberate.

(4) Except as otherwise provided, references in this Act to a transfer of value made, or made by any person, include references to events on the happening of which tax is chargeable as if a transfer of value had been made, or, as the case may be, had been made by that person; and “transferor” shall be construed accordingly.'

Section 3A - Potentially exempt transfers

'Any reference in this Act to a potentially exempt transfer is a reference to a transfer of value-

(a) which is made by an individual on or after 18th March 1986 but before 22nd March 2006; and

(b) which, apart from this section, would be a chargeable transfer (or to the extent to which, apart from this section, it would be such a transfer); and

(c) to the extent that it constitutes either a gift to another individual or a gift into an accumulation and maintenance trust or a disabled trust.

(1A) Any reference in this Act to a potentially exempt transfer is also a reference to a transfer of value-

(a) which is made by an individual on or after 22nd March 2006,

(b) which, apart from this section, would be a chargeable transfer (or to the extent to which, apart from this section, it would be such a transfer), and

(c) to the extent that it constitutes-

(i) a gift to another individual,

(ii) a gift into a disabled trust, or

(iii) a gift into a bereaved minor's trust on the coming to an end of an immediate post-death interest.

(1B) Subsections (1) and (1A) above have effect subject to any provision of this Act which provides that a disposition (or transfer of value) of a particular description is not a potentially exempt transfer.

...'

Section 4 - Transfers on death

'(1) On the death of any person tax shall be charged as if, immediately before his death, he had made a transfer of value and the value transferred by it had been equal to the value of his estate immediately before his death.

(2) For the purposes of this section, where it cannot be known which of two or more persons who have died survived the other or others they shall be assumed to have died at the same instant.'

Section 5 - Meaning of estate

'(1) For the purposes of this Act a person's estate is the aggregate of all the property to which he is beneficially entitled, except that-

(a) the estate of a person-

(i) does not include an interest in possession in settled property to which section 71A or 71D below applies, and

(ii) does not include an interest in possession that falls within subsection (1A) below unless it falls within subsection (1B) below, and

(b) the estate of a person immediately before his death does not include excluded property or a foreign-owned work of art which is situated in the United Kingdom for one or more of the purposes of public display, cleaning and restoration (and for no other purpose).

(1A) An interest in possession falls within this subsection if-

(a) it is an interest in possession in settled property,

(b) the settled property is not property to which section 71A or 71D below applies,

(c) the person is beneficially entitled to the interest in possession,

(d) the person became beneficially entitled to the interest in possession on or after 22nd March 2006, and

(e) the interest in possession is-

(i) not an immediate post-death interest,

(ii) not a disabled person's interest, and

(iii) not a transitional serial interest.

(1B) An interest in possession falls within this subsection if-

(a) the person became beneficially entitled to it on or after 9 December 2009 by virtue of a disposition that was prevented from being a transfer of value by section 10 (no gratuitous benefit), and

(b) the person-

(i) has been a long-term UK resident at any time on or after 6 April 2025 while beneficially entitled to it, or

(ii) became beneficially entitled to it at a time before 6 April 2025 while domiciled in the United Kingdom.

(2) A person who has a general power which enables him, or would if he were sui juris enable him, to dispose of any property other than settled property, or to charge money on any property other than settled property, shall be treated as beneficially entitled to the property or money; and for this purpose “general power” means a power or authority enabling the person by whom it is exercisable to appoint or dispose of property as he thinks fit.

(3) In determining the value of a person's estate at any time his liabilities at that time shall be taken into account, except as otherwise provided by this Act.

(4) The liabilities to be taken into account in determining the value of a transferor's estate immediately after a transfer of value include his liability for inheritance tax on the value transferred but not his liability (if any) for any other tax or duty resulting from the transfer

(5) Except in the case of a liability imposed by law, a liability incurred by a transferor shall be taken into account only to the extent that it was incurred for a consideration in money or money's worth.'

Section 6 - Excluded property

'(1) Property situated outside the United Kingdom is excluded property if the person beneficially entitled to it is an individual who is not a long-term UK resident

...

(4) Property to which this subsection applies by virtue of section 155(1) or (5A) below is excluded property.

(5) This section is subject to Schedule A1 (non-excluded overseas property)'

Section 160 - Market value

Except as otherwise provided by this Act, the value at any time of any property shall for the purposes of this Act be the price which the property might reasonably be expected to fetch if sold in the open market at that time; but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time.

Section 272 - General interpretation

…

“excluded property” shall be construed in accordance with sections 6, 48 and 48ZA above and Schedule A1;

“property” includes rights and interests of any description but does not include a settlement power;

...

[3] In Executors of the Estate of Linington v Revenue and Customs Commissioners [2023] UKFTT 89 (TC); [2023] WTLR 917, Judge Amanda Brown KC in First-tier Tribunal gave a (very limited) outline of the Inheritance Act 1984 ('IHT') core elements:

(1) IHT is charged on the value transferred by a "chargeable transfer" (s1).

(2) A "chargeable transfer" is a transfer of value made by an individual other than an exempt transfer (s2(1)).

(3) A "transfer of value" is "a disposition made by a person…as a result of which the value of his estate immediately after the disposition is less than it would be but for the disposition". The value transferred by the transfer is "the amount by which the value of his estate is less" as a result of the transfer (s3(1)).

(4) In deciding whether there is a transfer of value within s3(1), no account is taken of excluded property which ceases to form part of a person's estate as a result of a disposition (s3(2)).

(5) IHT is charged on death as if the deceased had made a transfer of value immediately before he died; the value transferred is taken to be equal to the value of his estate at that time (s4).

(6) A person's estate consists of all the property to which he is beneficially entitled (s5(1)) but does not include an interest in possession acquired after 21 March 2006 (s5(1)(a)). Furthermore, a person's estate immediately before death does not include excluded property (s5(1)(b)).

(7) "property" is defined to include "rights and interests of any description but does not include a settlement power (s272). A settlement power is defined to mean any power over or exercisable (whether directly or indirectly) in relation to settled property or a settlement (s272 and s47A).

(8) Transfers of value do not include dispositions made by way of arm's length transactions which are not intended to confer gratuitous benefit on any person (s10).

(9) Both of the following are excluded property:

(a) a reversionary interest in an offshore trust, unless it was acquired for consideration in money or money's worth (s48(1)); and

(b) settled property (other than a reversionary interest) if the property is outside the UK and the settlor was nondomiciled (s48(3)).

(10) The value of property shall be determined as the price which the property might reasonably be expected to fetch if sold on the open market at the time at which it is to be valued (s160).'

In Elborne's Executors v Revenue and Customs Commissioners [2025] UKUT 59 (TCC); [2025] STC 394, Upper Tribunal (Tax and Chancery), Judge Jeanette Zaman and Judge Vimal Tilakapala, under the heading 'Relevant Legislation', said at paragraphs 18 to 20:

'Part 1 of the IHTA 1984 includes the main charges and definitions. Section 1 charges inheritance tax on the value transferred by a chargeable transfer. Section 3 provides that a transfer of value is a disposition made by a person as a result of which the value of his or her estate immediately after the disposition is less than it would be but for the disposition. Section 3(1) provides that, "[subject] to the following provisions of this Part of this Act, a transfer of value is a disposition made by a person (the transferor) as a result of which the value of his estate immediately after the disposition is less than it would be but for the disposition; and the amount by which it is less is the value transferred by the transfer."

Section 4(1) provides that, "[on] the death of any person tax shall be charged as if, immediately before his death, he had made a transfer of value and the value transferred by it had been equal to the value of his estate immediately before his death."

Section 5 sets out the meaning of the word "estate" and provides, so far as relevant, as follows:

(1) For the purposes of this Act a person's estate is the aggregate of all the property to which he is beneficially entitled…

(3) In determining the value of a person's estate at any time his liabilities at that time shall be taken into account, except as otherwise provided by this Act …

(5) Except in the case of a liability imposed by law, a liability incurred by a transferor shall be taken into account only to the extent that it was incurred for a consideration in money or money's worth."

In Alexander v Inland Revenue Commissioners (1991) 23 H.L.R. 236 ('Alexander'), Nicholls LJ (with whom Sir Denys Buckley agreed) said, at 247-248 ('done' should read 'donee' in second paragraph):

'For present purposes the scheme can be sufficiently summarised as follows:

(1) Stated in its broadest and simplest form, the underlying scheme of the legislation is that inheritance tax is payable when property is given away. The tax is payable, not (a) in respect of the value of what is given, but (b) in respect of the amount by which the donor's estate is diminished by reason of the gift. In most cases these two different measures will produce the same result, but not always. One example is where a donor holds a controlling interest in a company and he gives away part of his shareholding, with the result that thereafter neither he nor the done has a controlling interest. In such a case (a) the value of the shares given may well be substantially less than (b) the extent to which the value of the donor's estate was diminished by the gift. But tax is payable in respect of (b), not (a). This is the effect of section 20 of the Finance Act 1975. The “disposition” which the gift constitutes is a “transfer of value” and as such a “chargeable transfer.” The “value transferred by the transfer” is the amount by which “the value of [the transferor's] estate immediately after the disposition is less than it would be but for the disposition” (s. 20(2)). Thus the legislation focuses attention on what the transferor possessed pre-gift; the tax is payable by reference to what he lost.

(2) A like principle is applied in the case of death. There is then a deemed transfer of value immediately before the death. In short, the deceased is deemed to have made a transfer of value of the whole of his estate. Tax is chargeable “as if” he had made a transfer of value equal to “the value of his estate immediately before his death.” That is the basic provision in section 22(1). So, here also, it is necessary to value what the deceased possessed. In the case of death, tax is chargeable in respect of the whole of that value.

(3) Thus, the legislation makes it necessary to identify the “value” of an estate at a particular time. In short, value means market value: “the price which the property might reasonably be expected to fetch if sold in the open market at the time” (s.38(1)). This mode of valuation involves a notional sale of the property in question at the relevant time. But in prescribing a notional sale, the section is doing no more than prescribe the basis on which the valuation shall be made. The national sale does not change the subject-matter of the valuation. What is being valued is property belonging to the transferor, and it is being valued as at a time when he still owned it. The notional sale is designed merely to identify the sum which a purchaser in the open market might reasonably be expected to pay to be placed, in respect of that property, in the same position as the transferor. This interpretation of section 38 accords with the decision of the House of Lords in Commissioners of Inland Revenue v. Crossman [1977] A.C. 26 regarding the comparable valuation provisions in the estate duty legislation (Finance Act 1894, s.7(5)). As Viscount Hailsham L.C. said (at p. 42), the notional sale is “merely a statutory direction as to the method by which the value is to be ascertained.”

These principles have now been reproduced in corresponding provisions in section 2, 3, 4 and 160 of the Inheritance Tax Act 1984.'

In Alexander, Ralph Gibson LJ also gave a judgment (which Sir Denys Buckley agreed with)

Where the property is agricultural land, reference can be made to Lloyds TSB Private Banking Plc v Twiddy [2006] 1 E.G.L.R. 157 [2006] R.V.R. 138, Lands Tribunal (George Bartlett QC (President); NJ Rose FRICS), where, under the heading 'The statutory provisions and their effect', George Bartlett QC, said, at paragraphs 6 to 10:

'6. Under section 4 of the Act [the deceased] was treated on her death, for the purposes of IHT, as making a transfer of value, with the value thereby transferred being equal to the value of her estate immediately before her death. Her estate for this purpose was the aggregate of all the property to which she was beneficially entitled (section 5(1)). To the extent that the value transferred was attributable to the agricultural value of agricultural property comprised in her estate, the value transferred was treated as reduced, for IHT purposes, by 100 per cent of such agricultural value (section 116(1) and (2)(a)). The agricultural value of the agricultural property was thus wholly relieved from IHT. To the extent that the value transferred was not attributable to the agricultural value of the agricultural property but was attributable to any land or building (or other asset) wholly or mainly used for the purposes of her business, the value transferred was treated as reduced by 100% of such business asset value. The market value of assets wholly or mainly used in the business was thus wholly relieved from IHT to the extent that the value was not already relieved by agricultural property relief.

7. We are not here concerned with business property relief. The issue is the agricultural value of agricultural property that is attributable to the value transferred. The issue falls to be determined on the basis of the following definition in the Act. The value of property is defined as market value in these terms by section 160:

"Market value

Except as otherwise provided by this Act, the value at any time of any property shall for the purposes of this Act be the price which the property might reasonably be expected to fetch if sold in the open market at that time; but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time."

8. "Agricultural property" is defined by section 115(2):

"(2) In this Chapter 'agricultural property' means agricultural land or pasture and includes woodland and any building used in connection with the intensive rearing of livestock or fish if the woodland or building is occupied with agricultural land or pasture and the occupation is ancillary to that of the agricultural land or pasture; and also includes such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property."

9. "Agricultural value" is defined by section 115(3):

"(3) For the purposes of this Chapter the agricultural value of any agricultural property shall be taken to be the value which would be the value of the property if the property were subject to a perpetual covenant prohibiting its use otherwise than as agricultural property."

10. It is also to be noted that under section 117, the relief conferred by section 116 cannot be claimed unless (a) the agricultural property was occupied by the transferor for the purposes of agriculture throughout the period of two years ending with the date of the transfer or (b) it was owned by him throughout the period of 7 years ending with that date and was throughout occupied (by him or another) for the purposes of agriculture.'

[3a] In Duke of Buccleuch v Inland Revenue Commissioners [1967] 1 AC 506; [1967] 2 WLR 207, Lord Reid said (in relation to s.160 of the Inheritance Act 1984's predecessor but one, s.7(5) of the Finance Act 1894), at 523-524:

'Section 7 of the Finance Act, 1894, provides that in determining the value of "an estate" certain deductions are to be made. Estate there means the whole estate. Then section 7 (5) provides:

"(5) The principal value of any property shall be estimated to be the price which, in the opinion of the commissioners, such property would fetch if sold in the open market at the time of the death of the deceased;"

In my view "any property" does not refer to the whole estate of the deceased. His estate generally consists of a wide variety of different kinds of property - land, chattels, and incorporeal rights - and it would clearly be impossible to value it as a whole. The context shows that "any property" must mean any part of the estate which it is proper to treat as a unit for valuation purposes.'

Lord Reid then said 'This case turns on the determination of what are the correct principles to apply in subdividing an estate into units for valuation purposes, and it shows how greatly the total value of the estate may differ according to how it has been subdivided. The statute is silent as to the proper methods of division.'

Later, Lord Reid said, at 525 and 526:

'Generally the estate will consist of what one may call natural units - units or parcels of property which can be easily identified without there being any substantial difficulty or expense in carving them out of the whole estate. In my opinion it is implicit in the scheme of the Act that section 7 (5) should be applied to each of such units, and there is no justification for requiring elaborate subdivision of natural units on the ground that if that had been done before the hypothetical sale the total price for the natural unit would have been increased. We must take the estate as it was when the deceased died, often the price which a piece of property would fetch would be considerably enhanced by small expense in minor repair or cleaning which would make the property more attractive to the eye of the buyer. But admittedly that cannot be supposed to have been done. and I see no more justification for requiring the supposition that natural units have been subdivided. This subsection applies to all kinds of property. A library was instanced by Winn L.J. Generally there would be little difficulty, delay or expense in getting someone knowledgeable to pick out valuable books for separate valuation and I would therefore regard such books as natural units. But suppose that the deceased had bought a miscellaneous and mixed lot of surplus stores intending to sort out and arrange them in saleable lots. That might involve a great deal of work, time and expense and I see no justification for requiring the supposition that that had been done and then valuing the saleable lots that would have emerged.

It is sometimes said that the estate must be supposed to have been realised in such a way that the best possible prices were obtained for its parts. But that cannot be a universal rule. Suppose that the owner of a wholesale business dies possessed of a large quantity of hardware or clothing or whatever he deals in. It would have been possible by extensive advertising to obtain offers for small lots at something near retail prices. So it would have been possible to realise the stock at much more than wholesale prices. It would not have been reasonable and it would not have been economic, but it would have been possible. Counsel for the respondents did not contend that that would be a proper method of valuation. But that necessarily amounts to an admission that there is no universal rule that the best possible prices at the date of death must be taken.

I have said that this Act applies rough and ready methods. It is vain to apply theoretical logic. The question of what units to value is a practical question to be solved by common sense. So if the commissioners apply the right criteria there is no appeal. But in this case it is difficult to discover whether the commissioners or the tribunal have applied the right criteria.'

Quite how a (not insubstantial) estate is subdivided into 'units' is left, in practice, to a matter of common sense. Lord Wilberforce in Buccleuch said, at 546:

“When, as is usually the case, the estate consists of an aggregate of items of property, each item must be separately valued, and it is not difficult to see that problems may arise as to the manner in which the separate units of valuation are to be ascertained or in which individual items are to be grouped into units of valuation. These problems must necessarily be resolved, as they are in practice, in a common sense way. The estate is to be taken as it is found: it is not to be supposed, in order to obtain higher figures of valuation, that any substantial expense is to be incurred or work done in organizing the estate into units: on the other hand, some practical grouping or classification, such as can reasonably be carried out without undue expenditure of time or effort, by a prudent man concerned to obtain the most favorable price, may be supposed.

Questions of subdivisions or grouping must commonly occur in relation to the larger landed estates, which may consist of farms, houses, allotments, woodlands, accommodation lands and incorporeal rights. Ellesmere (Earl of) v. Inland Revenue Commissioners [[1918] 2 K.B. 738; 119 L.T. 568] decided in 1918, was concerned with such an estate and it appears that the method there approved by the court has been adopted and followed generally as a working rule. The decision can be accepted as a sound and useful decision in the kind of situation to which it relates, but the limits of its application must be understood. The estate there was an aggregate of separate units, the division of which was apparent and which had been accepted immediately after the owner's death by his successors: the question for decision was whether the Revenue was bound to accept for valuation purposes the figure obtained through the actual sale of the estate as a whole or whether it was permissible to value the units. It did not involve and does not assist upon any question whether a particular "estate" ought to be regarded as one whole, or whether, for valuation, it may be regarded as divisible into portions and, if the latter, how many portions, or how they may be grouped. The judgment of Sankey J., with or without the passage quoted by Lord Denning M.R., and, as my noble and learned friend Lord Reid points out, omitted from the Law Reports, must be read in this light.'

Readers may wish to read in full, all the judgments in Buccleuch.

[4] Inheritance Act 1984 section 161 is entitled 'Related Property' and, for completeness, reads in full:

'(1) Where the value of any property comprised in a person's estate would be less than the appropriate portion of the value of the aggregate of that and any related property, it shall be the appropriate portion of the value of that aggregate.

(2) For the purposes of this section, property is related to the property comprised in a person's estate if-

(a) it is comprised in the estate of his spouse or civil partner; or

(b) it is or has within the preceding five years been-

(i) the property of a charity, or held on trust for charitable purposes only, or

(ii) the property of a body mentioned in section 24, 24A or 25 above, 

and became so on a transfer of value which was made by him or his spouse or civil partner after 15th April 1976 and was exempt to the extent that the value transferred was attributable to the property.

(3) The appropriate portion of the value of the aggregate mentioned in subsection (1) above is such portion thereof as would be attributable to the value of the first-mentioned property if the value of that aggregate were equal to the sums of the values of that and any related property, the value of each property being determined as if it did not form part of that aggregate.

(4) For the purposes of subsection (3) above the proportion which the value of a smaller number of shares of any class bears to the value of a greater number shall be taken to be that which the smaller number bears to the greater; and similarly with stock, debentures and units of any other description of property.

(5) Shares shall not be treated for the purposes of subsection (4) above as being of the same class unless they are so treated by the practice of a recognised stock exchange or would be so treated if dealt with on such a stock exchange.'

[4a] Inheritance Act 1984, section 24 is entitled 'Gifts to political parties'; section 24A is entitled 'Gifts to housing associations'; section 25 is entitled 'Gifts for national purposes etc'. They read as follows:

(a) Inheritance Act 1984, section 24:

'(1) Transfers of value are exempt to the extent that the values transferred by them-

(a) are attributable to property which becomes the property of a political party qualifying for exemption under this section; and

(2) A political party qualifies for exemption under this section if, at the last general election preceding the transfer of value,

(a) two members of that party were elected to the House of Commons, or

(b) one member of that party was elected to the House of Commons and not less than 150,000 votes were given to candidates who were members of that party.

(3) Subsections (2) to (5) of section 23 above shall apply in relation to subsection (1) above as they apply in relation to section 23(1).

(4) For the purposes of section 23(2) to (5) as they apply by virtue of subsection (3) above property is given to any person or body if it becomes the property of or is held on trust for that person or body, and “donor” shall be construed accordingly.'

(b) Inheritance Act 1984, section 24A:

'(1) A transfer of value is exempt to the extent that the value transferred by it is attributable to land in the United Kingdom given to a body falling within subsection (2) below.

(2) A body falls within this subsection if it is -

(za) a non-profit registered provider of social housing;

(a) a registered social landlord within the meaning of Part I of the Housing Act 1996;

(b) a registered housing association within the meaning of the Housing Association Act 1985; or

(c) a registered housing association within the meaning of Part II of the Housing (Northern Ireland) Order 1992.

(3) Subsections (2) to (5) of section 23 and subsection (4) of section 24 above shall apply in relation to subsection (1) above as they apply in relation to section 24(1)'

(c) Inheritance Act 1984, section 25:

'(1) A transfer of value is an exempt transfer to the extent that the value transferred by it is attributable to property which becomes the property of a body within Schedule 3 to this Act.

(2) Subsections (2) to (5) of section 23 and subsection (4) of section 24 above shall apply in relation to subsection (1) above as they apply in relation to section 24(1), except that section 23(3) shall not prevent subsection (1) above from applying in relation to property consisting of the benefit of an agreement restricting the use of land.

(3) A transfer of value is an exempt transfer to the extent that the value transferred by it is attributable to property that is being transferred in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation).'

[5] Readers will recognise the wording of section 38 (of the Finance Act 1975)(now obsolete), had the same wording as now appears in section 160 of the Inheritance Act 1984 (save that 'capital transfer tax' appears in place of 'this Act'). Section 38, as originally enacted, read:

'(1) Except as otherwise provided by this Part of this Act, the value at any time of any property shall for the purposes of capital transfer tax be the price which the property might reasonably be expected to fetch if sold in the open market at that time; but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time.

(2) Schedule 10 to this Act shall have effect with respect to the valuation of property for the purposes of capital transfer tax and the determination of the value transferred by a transfer of value.'

[6] Finance Act 1984, section 7 (now obsolete) was entitled 'Value of property' and, when originally enacted, read:

'(1.) In determining the value of an estate for the purpose of Estate duty allowance shall be made for reasonable funeral expenses and for debts and incumbrances; but an allowance shall not be made -

(a) for debts incurred by the deceased, or incumbrances created by a disposition made by the deceased, unless such debts or incumbrances were incurred or created bonâ fide for full consideration in money or money's worth wholly for the deceased's own use and benefit and take effect out of his interest, nor

(b) for any debt in respect whereof there is a right to reimbursement from any other estate or person, unless such reimbursement cannot be obtained, nor

(c) more than once for the same debt or incumbrance charged upon different portions of the estate;

and any debt or incumbrance for which an allowance is made shall be deducted from the value of the land or other subjects of property liable thereto.

(2.) An allowance shall not be made in the first instance for debts due from the deceased to persons resident out of the United Kingdom, (unless contracted to be paid in the United Kingdom, or charged on property situate within the United Kingdom), except out of the value of any personal property of the deceased situate out of the United Kingdom in respect of which Estate duty is paid; and there shall be no repayment of Estate duty in respect of any such debts, except to the extent to which it is shown to the satisfaction of the Commissioners, that the personal property of the deceased situate in the foreign country or British possession in which the person to whom such debts are due resides, is insufficient for their payment.

(3.) Where the Commissioners are satisfied that any additional expense in administering or in realising property has been incurred by reason of the property being situate out of the United Kingdom, they may make an allowance from the value of the property on account of such expense not exceeding in any case five per cent. on the value of the property.

(4.) Where any property passing on the death of the deceased is situate in a foreign country, and the Commissioners are satisfied that by reason of such death any duty is payable in that foreign country in respect of that property, they shall make an allowance of the amount of that duty from the value of the property.

(5.) The principal value of any property shall be estimated to be the price which, in the opinion of the Commissioners, such property would fetch if sold in the open market at the time of the death of the deceased; Provided that, in the case of any agricultural property, where no part of the principal value is due to the expectation of an increased income from such property, the principal value shall not exceed twenty-five times the annual value as assessed under Schedule A. of the Income Tax Acts, after making such deductions as have not been allowed in that assessment and are allowed under the Succession Duty Act, 1853, and making a deduction for expenses of management not exceeding five per cent. of the annual value so assessed.

(6.) Where an estate includes an interest in expectancy, Estate duty in respect of that interest shall be paid, at the option of the person accountable for the duty, either with the duty in respect of the rest of the estate or when the interest falls into possession, and if the duty is not paid with the Estate duty in respect of the rest of the estate, then -

(b) the rate of Estate duty in respect of the interest when it falls into possession shall be calculated according to its value when it falls into possession, together with the value of the rest of the estate as previously ascertained.

(7.) The value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased shall -

(a) if the interest extended to the whole income of the property, be the principal value of that property; and

(b) if the interest extended to less than the whole income of the property, be the principal value of an addition to the property equal to the income to which the interest extended.

(8.) Subject to the provisions of this Act, the value of any property for the purpose of Estate duty shall be ascertained by the Commissioners in such manner and by such means as they think fit, and, if they authorise a person to inspect any property and report to them the value thereof for the purposes of this Act, the person having the custody or possession of that property shall permit the person so authorised to inspect it at such reasonable times as the Commissioners consider necessary.

(9.) Where the Commissioners require a valuation to be made by a person named by them, the reasonable costs of such valuation shall be defrayed by the Commissioners.

(10.) Property passing on any death shall not be aggregated more than once, nor shall Estate duty in respect thereof be more than once levied on the same death.'

[6a] In Lynall v I.R.C. [1972] A.C. 680 ('Lynall'), House of Lords, Lord Morris said, at 699:

'There may be different markets. or types of markets for differing varieties of property but in the operation of section 7 (5) of the Finance Act 1894, the market which must be contemplated, whatever its form, must be an "open" market in which the property is offered for sale to the world at large so that all potential purchasers have an equal opportunity to make an offer as a result of its being openly known what it is that is being offered for sale. Mere private deals on a confidential basis are not the equivalent of open market transactions.'

[7] In Duke of Buccleuch v Inland Revenue Commissioners [1967] 1 AC 506 [1967] 2 WLR 207 ('Buccleuch'), Lord Reid made some observations about the test of 'open market' (in s.160 of the Inheritance Act 1984's predecessor but one), at 524 to 525:

'It requires an estimate of the price which a particular unit would fetch if sold in a certain way, so one must envisage a hypothetical sale of the actual unit. and that sale must be supposed to have taken place "in the open market" and "at the time of the death." The section must mean the price which the property would have fetched if sold at the time of the death....

There was some argument about the meaning of "in the open market." Originally no doubt when one wanted to sell a particular item of property one took it to a market where buyers of that kind of property congregated. Then the owner received offers and accepted what he thought was the best offer he was likely to get, and for some kinds of property that is still done. But this phrase must also be applied to other kinds of property where that is impossible. In my view the phrase requires that the seller must take - or here be supposed to have taken - such steps as are e [SIC] reasonable to attract as much competition as possible for the particular piece of property which is to be sold. Sometimes this will be by sale by auction, sometimes otherwise. I suppose that the biggest open market is the Stock Exchange where there is no auction. and there may be two kinds of market commonly used by owners wishing to sell a particular kind of property. For example, it is common knowledge that many owners of houses first publish the fact that they wish to sell and then await offers: they only put the property up for auction as a last resort. I see no reason for holding that in proper cases the former method could not be regarded as sale in the open market.

But here what must be envisaged is sale in the open market on a particular day. So there is no room for supposing that the owner would do as many prudent owners do - withdraw the property if he does not get a sufficient offer and wait until a time when he can get a better offer. The commissioners must estimate what the property would probably have fetched on that particular day if it had then been exposed for sale, no doubt after such advance publicity as would have been reasonable.

I am confirmed in my opinion by the fact that the Act permits no deduction from the price fetched of the expenses involved in the sale (except in the case of property abroad under subsection (3)). It is notorious that the rough and ready provisions of many sections of this Act can lead to great injustice with estate duty at its present level. But one must construe the Act keeping in mind that the maximum rate of duty which it provided was 8 per cent. Parliament - or the Liberal Government of the time - seems to have thought that it was best to keep the scheme simple and to omit things which justice would seem to require if the practical difference with a low rate of duty would in most cases be negligible or would at worst be small. I find it impossible to suppose that they can have contemplated that the kinds of hypothetical sale which they envisaged would involve heavy expenses. In applying the provisions of any Act one must always try to find a construction which is not unreasonable.'

Lord Reid then said:

'With these matters in view I turn to consider the main question of law in this case - how the whole estate of the deceased should be divided into units for separate valuation.'

[7a] IRC v Gray [1994] STC 360, as Hoffman LJ stated, at paragraph 1, concerned:

'...the valuation of agricultural land for the purposes of what is now called inheritance tax but was at the material time called capital transfer tax on death.'

Later, Hoffman LJ said, at paragraph 3:

'The valuation of each item must be made in accordance with section 38, which says that “the value at any time of any property shall for the purposes of capital transfer tax be the price which the property might reasonably be expected to fetch if sold in the open market at that time."'

[8] In IRC v Gray [1994] STC 360 ('Gray'), under the heading 'Splitting and Joining', Hoffman LJ considered the cases of: (a) Duke of Buccleuch v. Inland Revenue Commissioners [1967] 1 AC 606; and (b) Attorney-General of Ceylon v. Mackie [1952] 2 All ER 775, and concluded, at paragraph 11:

'...whether one is taking apart or putting together, the principle is that the vendor must be supposed to have “taken the course which would get the largest price for the combined holding”, subject to the caveat in Buccleuch that it does not entail “undue expenditure of time and effort."'

Later, Hoffman LJ said (section 38 of the Finance Act 1975 is the now obsolete predecessor to s.160 of the Inheritance Act 1984):

'Section 38 requires one to consider what a particular item of property would have fetched if sold on the open market. The Buccleuch principle may require one to suppose that it was sold alone, split into parts or together with something else.'

As to jurisdiction of the tribunal to determine the value of land and other forms of property (i.e. books, stock, goodwill etc), in the proposed aggregate, see Gray under subheading 'The Jurisdiction Point', from paragraph 25. In  particular, Hoffman LJ said, at paragraph 29:

'In my judgment, therefore, jurisdiction was no objection to an aggregation required by the principle stated in Buccleuch.'

[9] While this will perhaps not arise in relation to the valuation of houses, but especially in relation to the valuation of private company shares, interesting issues can arise as to what type/depth of information: (a) the hypothetical seller would disclose ahead of the sale; (b) be available to the hypothetical buyer, released by third parties who hold it but who are no obligation to release it.

Lynall v IRC [1972] AC 680 ('Lynall') is an interesting case on this - it is a case about the value of shares in a private company (so only some parallels with valuing houses) held by a deceased (Mrs Lynall), on the deceased's death, for the purpose of Estate Duty (s.7(5) of the Finance Act 1894 - predecessor to Inheritance Tax 1984) and whether unpublished information (reports on the private company developing proposal to 'go public', held confidentially by the board of directors) would have been available, and so relevant (and so admissible) to arriving at open market value of the shares. Lord Pearson in Lynall said of the facts: 

'At the material time the company was highly prosperous though distributing small dividends. One of the shareholders, Mrs. Lynall, was 76 years of age. Another of them, her husband Ezra Herbert Lynall, was 69 years of age. There was an evident general probability that before very long the company would have to "go public," i.e., make a public issue of shares and cease to be a private company. If that happened, there would be a prospect of larger dividends and of the restrictions on transfer of shares being removed. That general probability for the fairly near future would be known in the hypothetical market and when taken in conjunction with the prosperity of the company would justify a price of £3 10s. per share.

But there was in fact more than that general probability.'

There were the confidential reports held by the board of directors.

Lord Reid in Lynall said, at 694:

'We must decide what the highest bidder would have offered in the hypothetical sale in the open market, which the Act requires us to imagine took place at the time of Mrs. Lynall's death. The sum which any bidder will ofter must depend on what he knows (or thinks he knows) about the property for which he bids. The decision of this case turns on the question what knowledge the hypothetical bidders must be supposed to have had about the affairs of [the private company]. One solution would be that they must be supposed to have been omniscient. But we have to consider what would in fact have happened if this imaginary sale had taken place, or at least - if we are looking for a general rule - what would happen in the event of a sale of this kind taking place. One thing which would not happen would be that the bidders would be omniscient. They would derive their knowledge from facts made available to them by the shareholder exposing the shares for sale. We must suppose that, being a willing seller and an honest man, he would give as much information as he was entitled to give. If he was not a director he would give the information which he could get as a share-holder. If he was a director and had confidential information, he could not disclose that information without the consent of the board of directors.'

What about where a third party may have authorised the hypothetical vendor to release more information to the hypothetical buyer. In Lynall, this was the chance that the board of directors of the private company, may have consented/permitted the hypothetical vendor to release to the hypothetical vendor, (highly) confidential information about the private company.

Lord Reid in Lynall said, at 694:

'In the present case if we are to suppose that the bidder only had information which he could obtain himself or which could be given without the consent of the board then admittedly £3 10s. is the correct estimate of what the highest bid would have been. But the revenue maintains and the Court of Appeal would seem to have held that it must be supposed that the board would have authorised the hypothetical seller to communicate highly confidential information to all who might come forward as bidders.'

The highly confidential information was about the prospect of the private company undertaking an early public issue. i.e. convert from a private company to a public company and it/its shares are admitted to a public share trading exchange (stock market) - removing/reducing the successful bidder being 'locked in' into the shares (he is taken to be about to purchase) for an extended period of time. In other words, shares in a public company are much more tradeable than shares in a private company. This enhanced prospect of going public, would make the shares more attractive, and so more valuable. Lord Reid said, at 694:

'Bidders would know that both Mrs. Lynall and her husband were elderly and that they held most of the shares. Their general experience would tell them that in such circumstances it is common for a private company to make a public issue and remove restrictions on the transfer of its shares. The successful bidder would have to lock up a sum of £200,000 or more until there was a free market in the shares. If there was a prospect of an early public issue he would be prepared to pay considerably more than if it were uncertain whether or when the company would "go public."'

and 

'...the board had reports which made it very probable that a public issue would be made in the near future. If bidders must be supposed to have known about these reports then it is agreed that there would have been a bid of £4 10s. per share.'

At 695, Lord Reid said:

'If the hypothetical sale on the open market requires us to suppose that competition has been invited then we would have to suppose that steps had been taken before the sale to enable a variety of persons, institutions or financial groups to consider what offers they would be prepared to make. It would not be a true sale in the open market if the seller were to discriminate between genuine potential buyers and give to some of them information which he withheld from others, because one from whom he withheld information might be the one who, if he had had the information, would have made the highest offer. The respondents' figure of £4 10s. per share can only be justified if it must be supposed that these reports would have been made known to all genuine potential buyers, or at least to accountants nominated by them. That could only have been done with the consent of Linread's board of directors. They were under no legal obligation to make any confidential information available. Circumstances vary so much that I have some difficulty in seeing how we could lay down any general rule that directors must be supposed to have done something which they were not obliged to do. The farthest we could possibly go would be to hold that directors be deemed to have done what all reasonable directors would do.

Then it might be reasonable to say that they would disclose information provided that its disclosure could not possibly prejudice the interests of the company. But that would not be sufficient to enable the respondents to succeed.

Not all financiers who might wish to bid in such a sale, and not even all accountants whom they might nominate, are equally trustworthy. A premature leakage of such information as these reports might disclose might be very damaging to the interests of the company, and the evidence in this case shows that in practice great care is taken to see that disclosure is only made to those of the highest repute. I could not hold it right to suppose that all reasonable directors would agree to disclose information such as these reports so widely as would be necessary if it had to be made available to all who must be regarded as genuine potential bidders or to their nominees. So in my opinion the respondents fail to justify their valuation of £4 10s. I would therefore allow this appeal.'

Lord Morris in Lynall, at 699, said that:

'...the question arises whether that information would be available not just to some possible purchasers and vendors but whether it would be available to hypothetical purchasers and vendors " in the open market." This must mean whether it would be openly available to all potential purchasers and vendors in the market or markets in which the relevant purchases and sales take place.'

The question then becomes, whether the information (contained in documents know as 'category B documents'), would be "open market" knowledge ('whether knowledge of category B documents and of the information which they contain would be "open market" knowledge' (at 699))? 

On the facts in Lynall, Lord Morris essentially restored the first instance decision, for the reasons given by the first instance judge. Lord Morris said 'The conclusion of the learned judge was that as such information was not published information and as (on Mr. Alan Lynall's evidence which the learned judge accepted) it would not in fact have been elicited on inquiry it ought not to enter into the calculation of price and value.' (at 699) and then later '...I would restore the decision of the learned judge' (at 699). This was the state of knowledge in the open market (i.e. the hypothetical buyer did not know/have the category B documents knowledge).

Lord Morris reasoned that there could be a:

(a) open market; and

(b) special market;

It, of course, was the open market, that Parliament had prescribed as the relevant one. The special market might exist in circumstances as envisaged by the Court of Appeal in Lynall. Lord Morris said, at 699-700:

'The differing view of the Court of Appeal was based on the evidence, above referred to, of the practice of boards of directors to answer reasonable questions in confidence to the advisers of an interested potential purchaser. If this is the practice and even if the sought - for information may be given "in confidence" to an interested potential purchaser himself, I cannot think that this equates with open market conditions. It was said that it should be assumed that a purchaser would make reasonable inquiries from all available sources and that it must further be assumed that he would receive true and factual answers. If, however, the category B documents and the information contained in them were confidential to the board, as they were, the information could not be made generally available so that it became open market knowledge. On this somewhat limited issue I therefore prefer the figure of £3 10s. and I would restore the decision of the learned judge.

On the wider issues I doubt whether it is possible to define with precision the extent or the limits of the information on the basis of which a hypothetical purchaser of shares on a sale in the open market might purchase. There may be cases where prudent and careful potential purchasers of a large block of shares will be unwilling to purchase unless they have the inducement of being given confidential information which is not generally known. If in practice some large deals take place on the basis that some information is given which must be kept secret, then any such practice is the practice not of an open market but of a special market operating in a special way. I would see great difficulties if the commissioners or a court had to assess the extent to which a particular board of directors would or would not have been likely or willing to answer some particular inquiries - though there may be some inquiries of which it can with certainty be said that they would readily and properly and openly have been answered. A purchaser in the open market would probably not be content merely with what would be published information in the sense of information which had been in print in some documents sent out by a company to its shareholders. He would form his own idea as to the company's prospects having regard to trends and developments which are matters of public knowledge. Furthermore, on known facts in regard to a private company and its directors and its management he would form his own reasonable deductions.'

Readers may find Lord Pearson's judgment in Lynall worth reading.

Separately, the House of Lords in Lynall also rejected the invitation to hold that IRC v Crossman [1937] AC 26, HL was wrongly decided. the House of Lords in Lynall concluded that it was correctly decided on the point that: (a) the statute required it to be assumed that a sale of shares could occur (despite restrictions existing to stop an unauthorised sale); but (b) when valuing those sale shares, the hypothetical buyer was taken to be receiving shares which would be subject to those restrictions. Lord Pearson in Lynall said 'To my mind, that is a clear and convincing statement.' (at 704) to the following passage from the judgment of Lord Fleming in the Scottish case of Salvesen's Trustees v. Inland Revenue Commissioners 1930 S.L.T. 387:

'... if the articles of association be complied with, a sale in the open market in a reasonable sense seems to be impossible. The petitioners argued that the maximum price the shareholder can obtain for his shares in the open market is determined by the best price he can obtain in the closed market, viz. £1. But it appears to me that if this argument is well founded, it merely demonstrates that there cannot be a real sale in the open market under the articles. The Act of Parliament requires, however, that the assumed sale, which is to guide the commissioners in estimating the value, is to take place in the open market. Under these circumstances I think that there is no escape from the conclusion that any restrictions which prevent the shares being sold on the open market must be disregarded so far as the assumed sale under section 7(5) of the Act of 1894 is concerned. But, on the other hand, the terms of that subsection do not require or authorise the  commissioners to disregard such restrictions in considering the nature and value of the subject which the hypothetical buyer acquires at the assumed sale. Though he is deemed to buy in an open and unrestricted market, he buys a share which, after it is transferred to him, is subject to all the conditions in the articles of association, including the restrictions on the right of transfer, and this circumstance may affect the price which he would be willing to offer.'

In essence, IRC v Crossman [1937] AC 26, HL ('Crossman') followed (see Viscount Hailsham LC, at 38 in Crossman): 

(a) The Irish case of Attorney-General for Ireland v. Jameson [1905] 2 I. R. 218, Court of Appeal of Ireland(Lord Ashbourne L.C. and FitzGibbon, Walker and Holmes L.JJ); and

(b) The Scottish case of Salvesen's Trustees v. Commissioners of Inland Revenue 1930 S.L.T. 387.

[10] In Bower v Revenue and Customs Commissioners [2008] EWHC 3105 (Ch) [2009] STC 510, Lewison J said, at paragraphs 3 to 6:

'The hypothesis laid down by section 160 of the Inheritance Tax Act 1984 is a familiar one in many areas of the law. It applies equally to the acquisition of land by compulsory purchase and to many other property rights. A general explanation of how this concept works is given by Hoffman LJ in Inland Revenue Commissioners v Gray [1994] STC 360, and in particular at 371 to 372. What the Lord Justice said was:

“The only express guidance which s 38 offers on the circumstances in which the hypothetical sale must be supposed to have taken place is that it was ‘in the open market’. But this deficiency has been amply remedied by the courts during the century since the provision first made its appearance for the purposes of estate duty in the Finance Act 1894. Certain things are necessarily entailed by the statutory hypothesis. The property must be assumed to have been capable of sale in the open market, even if in fact it was inherently unassignable or held subject to restrictions on sale. The question is what a purchaser in the open market would have paid to enjoy whatever rights attached to the property at the relevant date (see IRC v Crossman [1937] AC 26). Furthermore, the hypothesis must be applied to the property as it actually existed and not to some other property, even if in real life a vendor would have been likely to make some changes or improvements before putting it on the market (see Duke of Buccleuch v IRC [1967] 1 AC 506 at 525). To this extent, but only to this extent, the express terms of the statute may introduce an element of artificiality into the hypothesis.”

I pause there to note that in relation to IRC v Crossman what Hoffman LJ says is that the property must be assumed to have been capable of sale, i.e. there is no legal restriction which prevents its sale. He does not say that it must be assumed to have had a particular value. Hoffman LJ goes on:

“In all other respects, the theme which runs through the authorities is that we assume that the hypothetical vendor and purchaser did whatever reasonable people buying and selling such property would be likely to have done in real life. The hypothetical vendor is an anonymous but reasonable vendor, who goes about the sale as a prudent man of business, negotiating seriously without giving the impression of being either over-anxious or unduly reluctant. The hypothetical buyer is slightly less anonymous. He too is assumed to have behaved reasonably, making proper enquiries about the property and not appearing too eager to buy. But he also reflects reality in that he embodies whatever was actually the demand for that property at the relevant time. It cannot be too strongly emphasised that although the sale is hypothetical, there is nothing hypothetical about the open market in which it is supposed to have taken place. The concept of the open market involves assuming that the whole world was free to bid and then forming a view about what in those circumstances would in real life have been the best price reasonably obtainable. The practical nature of this exercise will usually mean that although in principle no one is excluded from consideration, most of the world will usually play no part in the calculation. The enquiry will often focus upon what a relatively small number of people would be likely to have paid. It may have to arrive at a figure within a range of prices which the evidence shows that various people would have been likely to pay, reflecting, for example, the fact that one person had a particular reason for paying a higher price than others but taking into account, if appropriate, the possibility that through accident or whim he might not actually have bought. The valuation is thus a retrospective exercise in probabilities, wholly derived from the real world but rarely committed to the proposition that a sale to a particular purchaser would definitely have happened.”

[Counsel] for the executors stressed that part of the ruling that the hypothetical vendor and purchaser were prudent men of business negotiating seriously, but in my judgment the key point is that there is nothing hypothetical about the market in which the sale takes place. Thus, the hypothetical vendor and purchaser are serious prudent men of business of the kind who buy and sell the asset in question. If in the real world there are no speculators in the kind of asset under consideration, then in my judgment the statutory hypothesis does not require them to be invented.

In Walton v Inland Revenue Commissioners [1996] STC 68 Peter Gibson LJ also returned to the general theme. He said at page 85:

“The statute assumes a sale. That means that however improbable it is that there would ever be a sale of the property in the real world, for example because of restrictions attached to the property, nevertheless the sale must be treated as capable of being completed, the purchaser then holding the property subject to the same restrictions (see IRC v Crossman [1937] AC 26). It also means that the vendor, if he is offered the best price reasonably obtainable in the market, cannot be assumed to say that he will not sell because the price is too low as inadequately reflecting some feature of the property nor can the purchaser be assumed to say that he will not buy because the price is too high. Because the market is the open market, the whole world is to be assumed to be free to bid. But the valuer will inquire into what sort of person will be in the market for the property in question and what price the possible purchaser would be likely to pay.”

Thus, although the whole world is in theory free to bid, there must be an enquiry into who is in the market. This is an enquiry, not an assumption, and in my judgment, an enquiry is an enquiry into the facts.'

[10a] In IRC v Crossman [1937] AC 26 ('Crossman'), under the predecessor but one to s.160 of the Inheritance Act 1984, namely s.7(5) of the Finance Act 1894 (now obsolete), the House of Lords was required to decide what was the proper basis of valuation of shares in a limited company where the right of transfer was restricted by its articles of association. The House decided (by a majority of three to two overruling the Court of Appeal), that the restriction on transfer had simply to be disregarded for the purposes of assuming a hypothetical sale; but that the resultant valuation should nevertheless still take account of the same restriction continuing in the hands of the purchasers. In so doing they approved Attorney General for Ireland v. Jameson (1905) 2 I.R. 218 and Salvesen’s Trs. v. Commissioners of Inland Revenue, 1930 S.L.T. 387.

In Crossman, Viscount Hailsham LC, in commenting on the contrary decision of the Court of Appeal, said (at 41): 

‘it seems to me that this construction involves treating the provisions of s. 7, sub-s. 5, as if their true effect were to make the existence of an open market a condition of liability instead of merely to prescribe the open market price as the measure of value. The right to receive the price fixed by the articles in the event of a sale to existing shareholders under sub-cl. 14 a is only one of the elements which went to make up the value of the shares. In addition to that right, the ownership of the share gave a number of other valuable rights to the holder, including the right to receive the dividends which the Company was declaring, the right to transmit the share in accordance with art. 34, sub-cls. 1, 2, and 3 and the right to have the shares of other holders who wished to realise offered on the terms of art. 34, sub-cl. 14 a. All these various rights and privileges go to make up a share and form ingredients in its value. They are just as much part of the share as the restriction upon the sale. The construction placed upon the statute by the Court of Appeal seems to me to ignore all these elements in the value of the share and to treat as its value what, in truth, is only the value of one of the factors which go to make up that share. But the purpose of s. 7, sub- s. 5, is not to define the property in respect of which estate duty is to be levied, but merely to afford a method of ascertaining its value. If the view entertained by the Court of Appeal were correct, it would follow that any property which could not be sold in the open market would escape estate duty altogether.’ …

[10b] In Bower v Revenue and Customs Commissioners [2008] EWHC 3105 (Ch) [2009] STC 510 ('Bowers'), the asset under consideration, was an estate planning bond issued by Axa. What this gave the holder, was the right to receive, from Axa, £300 per month, for as long as a lady called Ms Marjorie Bower lived. The value, and indeed, whether there was anyone, in the market, for such an asset, heavily depended on:

(a) who Marjorie Bower was - more particularly her likely longevity;

(b) ability to '...lay off the mortality risk by buying back-to-back term insurance' (paragraph 7); and/or

(c) ability to '...minimise the mortality risk by pooling a number of such interests where the risks of each would have a self-cancelling effect.' (paragraph 7)

As to:

(a) 'Mrs Marjorie Bower, aged 90 and in poor health' (paragraph 1)

(b) and (c), at first instance, findings of fact were made that either (b) nor (c) would be possible. Lewison J said, at paragraphs 7 and 8 (Lewison J was hearing an appeal against the decision of the Special Commissioner; Mrs Bower was the deceased):

'The Special Commissioner accepted that in the real world the buyer of an interest like Mrs Bower's right to a monthly income for her lifetime would either wish to lay off the mortality risk by buying back-to-back term insurance or would wish to minimise the mortality risk by pooling a number of such interests where the risks of each would have a self-cancelling effect.

In paragraph 19 of his decision he came to the conclusion that no buyer would be able to lay off the mortality risk by taking out term life assurance. That was a finding of fact which necessarily influenced the way in which the market must be assessed. So far as pooling was concerned, he dealt with that in paragraph 20 of his decision. He decided that the possibility of pooling risks by buying more than one annuity was precluded by the statutory hypothesis which required a sale of Mrs Bower's rights alone. Thus, the Special Commissioner found that the combination of the real world and the statutory hypothesis was that those who buy interests of this type in the real world would not have bought this particular interest. As he put it in paragraph 26 of his decision:

“Whilst all of these considerations have some bearing on the valuation, it is still fair to summarise that the crucial factor in this case is the experience of Foster & Cranfield to the effect that in valuing life interests in settled property, purchasers almost invariably wish to lay off the mortality risk by taking out genuine term life assurance, and that, I accept and the Appellants accepted, will not be possible in the present case. The key question thus is whether that means that there would be no potential buyers of the relevant annuity for any figure in excess of the nominal figure that HMRC has suggested, namely £250.”'

After making those findings (which are the salient facts for this footnote), the Special Commissioner then erred, by wrongly invented a buyer. Lewison J said, at paragraph 11:

'...the Special Commissioner was, in my judgment, entitled to consider possible purchasers, he was not entitled to invent them. The assumption of a buyer in order to give effect to the statutory hypothesis in addition tells you nothing about the price which the buyer is assumed to have paid. If in the real world an asset is worthless, the statutory hypothesis does not make it valuable. It is not, in my judgment, lip service to the hypothesis...in those circumstances to ascribe a nominal value to an asset. On the contrary, it is the necessary consequence of a finding of fact that an asset is not commercially, as opposed to legally, saleable coupled with the assumption that a sale must be assumed to have taken place.'

Similarly, in Nader v Revenue and Customs Commissioners (also known as Re Dickens (Deceased)) [2018] UKFTT 294 (TC); [2018] S.F.T.D. 1128 ('Nader'), the asset (a right to income from a trust; an 'Income Interest') under consideration was held to be commercially unsaleable and having a value of nil. This was relevant to whether market value had been paid for the Income Interest, which in turn affected whether a transaction had caused net loss to the deceased's estate (and so amounted to a transfer of value for the purposes of s.3 of the Inheritance Act 1984 ('IHTA')).

In Nader, the Judge considered whether the appellants, who it was common ground (paragraph 137) borne the burden of proof, had displaced the determinations made against them (section 224 of the IHTA)). This extended to a ...'burden of proof to establish the open market value of the Income Interest' (paragraph 138). Explaining the situation, the Judge said:

'The open market value of the Income Interest is an essential ingredient in the analysis of whether a transfer of value within section 3 IHTA occurred. The determinations made against the appellants proceeded on the basis that there was a transfer of value by [the deceased] and it is up to the appellants to displace those determinations.'

£1m was paid for the Income Interest, but:

(1) evidence from a certain witness could be dismissed: 'he had little real understanding of the nature of the Income Interest. This fact alone indicates to me that the £1 million value assigned to the Income Interest cannot reflect its true open market value for the purposes of section 160 IHTA' (paragraph 146)

(2) the judge concluded that '...the amount of £1 million paid for the Income Interest was determined, not by the value of the Income Interest, but by the size of the liability required to shelter [the deceased's] estate from IHT.'

After quoting paragraphs 5, 6, 10 and 11 from Bower, the Judge in Nader said, at paragraphs 149 to 151 (Mr Watson was an expert for HMRC):

'The appellants, on whom the burden of proof lies, have failed to establish that there was any market or potential purchasers for the Income Interest. They put forward no evidence to show that there was a market of willing potential purchasers. Therefore, even the on the statutory assumption that a sale of the Income Interest took place (and that there was a hypothetical buyer), its value must, in my view, be nil.

In any event, I accept the evidence of Mr Watson that the value of the Income Interest was nil. Mr Watson was an auctioneer of trust interests. It is true that he had no experience of selling a trust interest which was similar to the Income Interest, but that was because, in my view, the Income Interest was a trust interest which was clearly of a bespoke nature one which was entirely designed for the IHT avoidance scheme for which it was created. Mr Watson gave evidence of the nature of the buyers who typically bought trust interests and his reasons for concluding that the Income Interest would not be attractive to those buyers seemed to me entirely sensible.

[Counsel for the appellants] criticised Mr Watson's evidence on the basis that he gave no methodology for his valuation. It seems to me that that was putting the cart before the horse. Mr Watson's expert opinion was that there was no market for the Income Interest and, on that basis, there was no point considering different valuation methodologies – the Income Interest was unsaleable. I accept Mr Watson's conclusion. As Lewison J put it in Bower at [11]: "If in the real world an asset is worthless, the statutory hypothesis does not make it valuable… [I]t is the necessary consequence of a finding of fact that an asset is not commercially saleable, as opposed to legally, saleable coupled with the assumption that a sale must be assumed to have taken place."'

The Judge in Nader concluded, at paragraph 154:

'In my judgment, therefore, the appellants have simply failed to discharge the burden of proof to show that the open market value of the Income Interest was £1 million (i.e. the amount paid by [the deceased] to acquire the Income Interest). In any event, as I have stated, I accept the evidence of Mr Watson that the open market value of the Income Interest was nil. Therefore, subject to the issue of section 10 IHTA, to which I now turn, I have concluded that there was a transfer of value of £1 million by [the deceased] to [another]...'

[11] Two areas here:

(1) As to 'special purchasers' - Peter Gibson LJ in Walton v IRC [1996] STC 68 said this, of two cases:

'In C.I.R. v Clay [1914] 3 K.B. 466 a house fell to be valued on an open market valuation. It had a special value to a special purchaser and the valuer took that fact into account in arriving at an open market value well above what the ordinary purchaser would pay. Sir Herbert Cozens- Hardy M.R. said at p.472, “It is for the referee, whose competence is not challenged, to arrive at a figure. The Court ought not, as a rule, to review his decision on what is in truth a question of fact.” Similarly Pickford L.J. at p.480 said of a special purchaser, “The effect on the market of such a purchaser is a matter to be estimated by the referee”.

Vyricherla Narayana Gajapatiraju v The Revenue Divisional Officer, Vizagapatam [1939] A.C. 302 was again a case where the presence of a special purchaser was held to be a factor which should be taken into account in an open market valuation....'

(2) As to the reference to Blumenthal v Revenue and Customs Commissioners [2012] UKFTT 497 (TC); [2012] S.F.T.D. 1264, in the First-tier Tribunal (Tax Chamber)(Judge Guy Brannan; Anne Redston), and to paragraphs 107 to 109, those paragraphs read:

'[Counsel for the taxpayer] repeated his earlier submission that the Ramsay principle had no application in this case and, in particular, it had no application to questions of valuation – this was a strict matter of law.

The Ramsay principle requires us to construe the relevant statutory provisions – sections 116(10) and 272 TCGA purposively and to take an un-blinkered view of the facts. We must interpret those provisions in order to determine whether the transactions in this case, viewed realistically, fall within the statutory provisions so interpreted.

Purposive interpretation plainly requires that a provision should be interpreted in its statutory context. There are over 200 references to market value in TCGA. It would be wearisome to go through every example but, for example, transactions between connected parties (section 18), bargains otherwise than at arm's length (section 17), deemed disposal by nonresidents ( section 25), value shifting (section 29), persons becoming entitled absolutely to settled property (section 71) all involve disposals or deemed disposals at market value. It is evident that in most of these cases Parliament intended that the requirement that a disposal be treated as occurring at market value should capture the true economic value of the asset, resulting in chargeable gains or allowable losses being assessed on the value. This is particularly so where because of some relationship (e.g. between connected persons) or circumstances surrounding a transaction (e.g. bargains otherwise than at arm's length) the value at which the transaction takes place is capable of manipulation. It is against this statutory background that we now turn to the two provisions in question.'

[12] In IRC v Gray [1994] STC 360, at paragraph 35, Hoffman LJ quoted part of the first instance Tribunal's judgment. This included a part which Hoffman LJ did not criticise, namely:

'Whilst the general basis of value to be adopted is prescribed by statute as open market value there is no prescription of the method of valuation to be applied'

In Valuation: Principles into Practice (6th Ed) (Edited by Richard Hayward)(2008), Charles Cowap MBA, MRICS, FAAV, MRAC, DipREM (Gold Medal), FHEA Principal Lecturer in Land Management and Director of Work Based Learning, Harper Adams University College, Shropshire states, in a chapter on agricultural land, but, in the author's view, of wider application (page 2):

'Like any other valuer, the agricultural valuer needs to be familiar with the five traditional methods of valuation. Although direct comparison is the mainstay of the rural valuer’s work, different rural assets may need the investment, residual, profits or depreciated replacement cost methods.'

and later,

'As always, comparable transactions of which the valuer has direct knowledge and which relate closely to the subject property in location, character, tenure and valuation date are the best guide.' (page 6)

[13] Where a leasehold (tenancy) is to be valued or an interest in a leasehold (tenancy), how is the landlord to be characterised? In Walton v IRC [1996] STC 68 ('Walton'), the Court of Appeal considered this issue. In Walton, the Revenue contended that the Lands Tribunal (from which the appeal was from) had 'erred in concluding that for the purposes of the valuation exercise one should take the actual landlord with all his attributes rather than assuming a hypothetical landlord who is neither desperate to purchase nor uninterested in purchasing and who is neither in straitened circumstances nor extremely rich. He submitted that as a matter of practical common sense, to admit the evidence of the actual landlord as to his desires and intentions is an unfair and undesirable course.'

Peter Gibson LJ in Walton said, at paragraph 24:

'I readily accept that such evidence may be self-serving, but it is for the tribunal of fact to determine, what, if any, credence should be given to that evidence. The fact that such evidence may be self-interested is not in my judgment sufficient reason to justify the implication that where the property to be valued is a tenancy or an interest in a tenancy the actual landlord is to be treated as stripped of his actual intentions and desires but clothed with hypothetical aspirations. The insuperable difficulty in [counsel for the Revenue's] path is that there is nothing in the statute to support his contention. The open market hypothesis does not require as a necessary incident of it that the landlord should be hypothetical. In my judgment the statute requires one to assume a sale but it should be assumed to take place in the real world. As was said by Lawton L.J. in Trocette Property Co. Ltd. v Greater London Council [1974] 28 P. & C.R. 408 at p.420:-

“It is important that this statutory world of make-believe should be kept as near as possible to reality. No assumption of any kind should be made unless provided for by statute or decided cases.”

In Trocette in the Court of Appeal, the majority consisted of Lawton LJ and Megaw LJ (Cairns LJ was in the minority). Peter Gibson LJ said of Trocette:

(1) 'The majority decision of this court in the Trocette case is in any event determinative of this question'; and

(2) 'In that case the claimants were the tenants of a property which they wanted to develop but they needed the concurrence of the respondent landlord. The landlord took the view that the property might be required for highway purposes and told the claimants that it was not prepared to grant a new lease. Nevertheless the claimants applied to the local planning authority for planning permission and when that was refused, served a purchase notice on that authority which accepted that it would purchase the claimants' interest as tenants of the property. By rule (2) of s.5 Land Compensation Act 1961 the compensation to be paid was “the amount which the land if sold in the open market might be expected to realise”. The Lands Tribunal to whom the question of compensation was referred held on this point that it was to be assumed that the landlord would grant a new long term lease to enable the development to proceed. The question that arose was formulated by Megaw L.J. (at p.415) thus:-

“Does the value of the claimants' interest, as a matter of law, fall to be assessed by reference to the actual intention of the actual landlord or by reference to the presumed reasonable intention of a hypothetical normal landlord, that is, a landlord who does not possess the special characteristics of the landlord in this case, namely, a local authority with a special planning interest relating to the use of the land in question?”

He said (at p.416):-

“No buyer in the open market is going to offer to pay a price which takes into account the leaseholder's share of the potential “marriage value” if that buyer knows that in fact the freehold owner is either unable or unwilling to do that which it is necessary for him to do in order to create the “marriage value”. I see nothing in the legislation … which compels or permits one to ignore, in assessing compensation for the leasehold interest, evidence of a fact which would be known to the buyers in the market and which would eliminate any question of “marriage value”. If the assessment of the value for the purpose of compensation is to be on the basis of ignoring a proven or admitted fact which would have affected the price of an actual sale on the open market, the use of such basis must, I think, be justified by reference to some provision of the legislation.”

...Lawton L.J. was also of the opinion that the Lands Tribunal erred in law in assuming that the freeholders would be likely to cooperate in releasing the potential value of the site, when the evidence showed that they would do nothing of the kind. He pointed out that any prospective buyer would have made enquiries about the prospect of the freeholders cooperating, but that if no information was available, the buyer might have inferred that the freeholders would be cooperative; but if the buyer knew that they would not be cooperative, the price offered would be on the basis of the value of the site for use for a limited period.

[Counsel for the Revenue] suggested that Lawton L.J. adopted a somewhat middle course between Megaw L.J. and Cairns L.J. I do not agree. At p.422 Lawton L.J. said:-

“In most cases it may well be that the personal characteristics of the parties are irrelevant, but if the evidence in a particular case establishes that buyers would be likely to be put off bidding beyond a certain figure because of the existence of an unusual factor such as the likely refusal to cooperate of a freeholder whose cooperation is essential if the full potential of the premises or site is to be released then the existence of that factor should be taken into consideration in assessing compensation, and this would be so whatever the reason for the existence of that factor might be. The assessment of compensation under rule (2) of section 5 of the Act of 1961 is not concerned with the search for an economic abstraction - a valuer's Holy Grail - but with “ … the amount which the land if sold in the open market by a willing seller might be expected to realise: … ” Who are likely to be buyers in such a market will depend on the facts of each case, and what they would be likely to bid, and their reasons for doing so, will also depend on the facts.”

In my judgment the reasoning of Lawton L.J. is fully in accord with that of Megaw L.J.'

Section 160's predecessor, s.38 of the Finance Act 1975 also does not require '...the assumption of a hypothetical landlord unless the actual landlord was a person with a policy known to the market.' (paragraph 30). Peter Gibson LJ in Walton rejected this statutory construction. He said that '...it is not justified by the language of s.38 nor by anything said by the majority in Trocette. It is not necessary for the operation of the statutory hypothesis of a sale in the open market of an interest in a tenancy that the landlord should be treated as a hypothetical person, and it is a question of fact to be established by the evidence before the tribunal of fact whether the attributes of the actual landlord would be taken into account in the market.'

This logic applies to a surviving partner to a partnership / partnership asset being a tenancy (or interest in the tenancy as a partnership asset) - where the deceased was a partner in that partnership. Peter Gibson LJ said in Walton, at paragraph 30:

'I would add that the same logic requires that in the case of a deceased partner owning an interest in a tenancy which is a partnership asset, regard should be had to the actual intention of the actual surviving partner and not to a hypothetical partner.'

[14] As to agricultural tenancies generally, see:

(a) Agricultural Holdings Act 1986 - generally, tenancies of agricultural land, demised prior to 1.9.95, will be governed by the Agricultural Holdings Act 1986;

(b) Agricultural Tenancies Act 1995 - in effect from 1.9.95; more landlord friendly;

(c) Inheritance Act 1984, Part 5 entitled 'Miscellaneous Reliefs', Chapter 2, entitled 'Agricultural Property', sections 115 to 124C.

In particular, section 116, entitled 'The relief' - contains the core provision for Agricultural property relief.

(d) Willett v CIR Lands Tribunal [1982] 264 EG 257;

(e) Baird’s Exors v Commissioners of Inland Revenue [1991] 1 EGLR 201; [1991] 09 EG 129 & 10 EG 153;

(f) Lloyds TSB Private Banking (personal representative of Rosemary Antrobus deceased) v Peter Twiddy DET/47/2004;

(g) Walton (Executor of Walton deceased) v CIR [1996] STC 68.

[15] Section 221 of the Inheritance Act 1984 is entitled 'Notices of determination' reads:

'(1) Where it appears to the Board that a transfer of value has been made or where a claim under this Act is made to the Board in connection with a transfer of value, the Board may give notice in writing to any person who appears to the Board to be the transferor or the claimant or to be liable for any of the tax chargeable on the value transferred, stating that they have determined the matters specified in the notice.

(2) The matters that may be specified in a notice under this section in relation to any transfer of value are all or any of the following-

(a) the date of the transfer;

(b) the value transferred and the value of any property to which the value transferred is wholly or partly attributable;

(c) the transferor;

(d) the tax chargeable (if any) and the persons who are liable for the whole or part of it;

(e) the amount of any payment made in excess of the tax for which a person is liable and the date from which and the rate at which tax or any repayment of tax overpaid carries interest; and

(f) any other matter that appears to the Board to be relevant for the purposes of this Act.

(3) A determination for the purposes of a notice under this section of any fact relating to a transfer of value -

(a) shall, if that fact has been stated in an account or return under this Part of this Act and the Board are satisfied that the account or return is correct, be made by the Board in accordance with that account or return, but

(b) may, in any other case, be made by the Board to the best of their judgment.

(4) A notice under this section shall state the time within which and the manner in which an appeal against any determination in it may be made.

(5) Subject to any variation by agreement in writing or on appeal, a determination in a notice under this section shall be conclusive for the purposes of this Act against the person on whom the notice is served; and if the notice is served on the transferor and specifies a determination of the value transferred by the transfer of value or previous transfers of value, the determination, so far as relevant to the tax chargeable in respect of later transfers of value (whether or not made by the transferor) shall be conclusive also against any other person, subject however to any adjustment under section 240 or 241 below.

(6) References in this section to transfers of value or to the values transferred by them shall be construed as including references to -

(a) chargeable events by reference to which tax is chargeable under section 32 or 32A of this Act,

(b) occasions on which tax is chargeable under Chapter III of Part III of this Act,

(c) disposals on which tax is chargeable under section 126 of this Act,

or to the amounts on which tax is then chargeable.'

[16] Section 222 of the Inheritance Act 1984 is entitled 'Appeals against determinations' reads:

'(1) A person on whom a notice under section 221 above has been served may, within thirty days of the service, appeal against any determination specified in it by notice in writing given to the Board and specifying the grounds of appeal.

(2) Sections 223D, 223G and 223H provide for notification of the appeal to the tribunal.

(3) Where-

(a) it is so agreed between the appellant and the Board, or

(b) the High Court, on an application made by the appellant, is satisfied that the matters to be decided on the appeal are likely to be substantially confined to questions of law and gives leave for that purpose,

the appeal may be notified to the High Court.

(4) An appeal on any question as to the value of land in the United Kingdom may be notified to the appropriate tribunal.

(4ZA) The appeal may be notified under subsection (3) or (4) only if it could be notified to the tribunal under section 223D, 223G or 223H.

(4A) If and so far as the question in dispute on any appeal under this section which has been notified to the tribunal or the High Court is a question as to the value of land in the United Kingdom, the question shall be determined on a reference to the appropriate tribunal.

(4B) In this section 'the appropriate tribunal' means -

(a) where the land is in England or Wales, the Upper Tribunal;

(b) where the land is in Scotland...

(c) where the land is in Northern Ireland...

(5) In the application of this section to Scotland...'

[17] Section 223A of the Inheritance Act 1984 is entitled 'Appeal: HMRC review or determination by tribunal' reads:

'(1) This section applies if notice of appeal has been given to HMRC.

(2) In such a case -

(a) the appellant may notify HMRC that the appellant requires HMRC to review the matter in question (see section 223B),

(b) HMRC may notify the appellant of an offer to review the matter in question (see section 223C), or

(c) the appellant may notify the appeal to the tribunal (see section 223D).

(3) See sections 223G and 223H for provision about notifying appeals to the tribunal after a review has been required by the appellant or offered by HMRC.'

[18] Section 223D of the Inheritance Act 1984 is entitled 'Notifying appeal to the tribunal' reads:

'(1) This section applies if notice of appeal has been given to HMRC.

(2) The appellant may notify the appeal to the tribunal.

(3) If the appellant notifies the appeal to the tribunal, the tribunal is to decide the matter in question.

(4) Subsections (2) and (3) do not apply in a case where -

(a) HMRC have given a notification of their view of the matter in question under section 223B, or

(b) HMRC have given a notification under section 223C in relation to the matter in question.

(5) In a case falling within subsection (4)(a) or (b), the appellant may notify the appeal to the tribunal, but only if permitted to do so by section 223G or 223H.'

Section 223G of the Inheritance Act 1984 is entitled 'Notifying appeal to tribunal after review concluded' reads:

'(1) This section applies if-

(a) HMRC have given notice of the conclusions of a review in accordance with section 223E, or

(b) the period specified in section 223E(6) has ended and HMRC have not given notice of the conclusions of the review.

(2) The appellant may notify the appeal to the tribunal within the post-review period.

(3) If the post-review period has ended, the appellant may notify the appeal to the tribunal only if the tribunal gives permission.

(4) If the appellant notifies the appeal to the tribunal, the tribunal is to determine the matter in question.

(5) The appellant may not notify the appeal to the tribunal under this section if the appeal has been notified to the court under section 222(3) or the appropriate Lands tribunal under section 222(4).

(6) In this section “post-review period” means-

(a) in a case falling within subsection (1)(a), the period of 30 days beginning with the date of the document in which HMRC give notice of the conclusions of the review in accordance with section 223E(6), or

(b) in a case falling within subsection (1)(b), the period that-

(i) begins with the day following the last day of the period specified in section 223E(6), and

(ii) ends 30 days after the date of the document in which HMRC give notice of the conclusion of the review in accordance with section 223E(9).'

Section 223H of the Inheritance Act 1984 is entitled 'Notifying appeal to tribunal after review offered but not accepted' reads:

'(1) This section applies if-

(a) HMRC have offered to review the matter in question (see section 223C), and

(b) the appellant has not accepted the offer.

(2) The appellant may notify the appeal to the tribunal within the acceptance period.

(3) But if the acceptance period has ended, the appellant may notify the appeal to the tribunal only if the tribunal gives permission.

(4) If the appellant notifies the appeal to the tribunal, the tribunal is to determine the matter in question.

(5) The appellant may not notify the appeal to the tribunal under this section if the appeal has been notified to the court under section 222(3) or the appropriate Lands tribunal under section 222(4).

(6) In this section “acceptance period” has the same meaning as in section 223C.'