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IHTA 1984, s 94(1) provides that, once the value transferred by a close company has been apportioned amongst its participators (and sub-apportioned as necessary), the IHT attributable to that transfer must be computed by considering each of those participators separately. Broadly, the tax due in respect of each participator is computed as if he had made a transfer equal in value to the amount apportioned to him, and on which he was to pay any tax due¹.

Since, however, he has made no such transfer, the diminution in the participator's estate cannot be determined according to the usual rules. It is, therefore, provided that the transfer of value is taken to be of such amount:

'as after deduction of tax (if any) would be equal to the amount [apportioned to him], less the amount (if any) by which the value of his estate is more than it would be but for the company's transfer^2'

This wording has the effect that the amount apportioned is always treated as