CG17935 - Taper relief: business asset disposals by individuals acquiring as legatees

Where a person disposes of shares acquired as a legatee the effect of TCGA92/S62, see CG31100+, is to treat the shares as acquired on the death of the testator. But a legatee does not actually become entitled to the shares until either residue of the deceased's estate is ascertained or the personal representatives agree to the transfer of the shares. So there is a period of the legatee's deemed ownership when it is the personal representatives who have the voting rights. Without the special provision in TCGA92/PARA4(5)/SCHA1 the shares could not be a business asset for that period. The special provision applies so that the shares are to be treated as a business asset in relation to that individual at any time when:

• the shares were held by the personal representatives of the deceased;

and

• the relevant company was a trading company or the holding company of a trading group, see CG17953;

and

• for periods before 6 April 2000, the personal representatives could exercise at least 25 per cent of the voting rights in that company, see CG17951;
• for periods from 6 April 2000, the relevant company was a qualifying company by reference to the personal representatives, see CG17950

It is not necessary for the legatee to get all the shares in the estate which the personal representatives hold. The test for the period of holding by the personal representatives and the test for the subsequent period are applied separately. So if, for periods before 6 April 2000, the personal representatives held 30 per cent of the voting shares of a trading company, and the legatee received 10 per cent of the voting shares, and was a full time working officer of the company, the shares would be a business asset for the whole period from the date of death.