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There should be no transfer of value on the formation of a partnership, provided that the case comes within the commercial transactions exemption¹ (see I3.141 and I6.203).

Each case must be decided on its merits, but the following summary gives guidance obtained from the judgments in Boden² (see I6.211) and Ralli³ (see I6.212):

1. Ìý

   (a)ÌýÌýÌýÌý As soon as a person transfers capital to a partnership he reduces the value of his estate slightly because he will either have to enforce a dissolution to withdraw the capital, or he will be locked into the partnership for a certain or uncertain period. The lack of gratuitous intent may help to nullify any claim to IHT, provided that there is no additional loss to his estate⁴

2. Ìý

   (b)ÌýÌýÌýÌý If the parties are not related and it is not HMRC's view that partners are connected at the moment of formation of the partnership (see I6.203 for a discussion):

3. 1. Ìý

      –ÌýÌýÌýÌý Where the rights and obligations of all the partners are identical,