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The valuation of an asset for IHT purposes is not affected by the fact that an actual sale would either be impossible, or would only fetch a restricted price.

The most common application of this principle is where the articles of association of a private company restrict the price which a member could receive on a sale of his shares. There is commonly a pre-emption clause under which the other members have a right to purchase the shares at a price fixed by the articles, or at a value calculated by the auditors of the company, often on a restricted basis. However, the existence of a pre-emption clause can still affect the value of the shares because the purchaser is deemed to acquire the shares subject to the restriction — see also I8.312.

The assumptions to be made concerning the hypothetical sale were established by the House of Lords in 1936 (reversing the judgment of the Court of Appeal by a majority of three to two) in Crossman¹.

What is valued, and thus