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This example relates to the commentary at I8.337 and illustrates the considerations arising on the creation of partnerships between connected parties. It also indicates the effects of the subsequent death of the husband (or a gift by him of his partnership share in his lifetime).

The example involves farming partnerships and the problems arising on the creation of a lease (see I3.159, I7.361) ¹ and the application of APR² and BPR ³ (see Division I7.3 and Division I7.1).

H owns the freehold of Hill Farm, which he has farmed for ten years. H has a wife (W) and a son (S). Various courses of action which H might follow are set out below, with an indication in each case of what IHT claims would arise, how the property would be valued and what agricultural or BPRs would apply.

For the purpose of illustration arbitrary values are assumed as below at all dates, present and future:

Scenario